Cryptogpt News, Dec 6: Sam Banksman Freud feels the heat as US politicians demand answers.

A top Democrat is now urging Sam Bankman Freud to testify before Congress next week – after his polite requests were denied.

The top Democrat urged Sam Bankman Fried to appear before Congress next Wednesday.

The chairman of the House Financial Services Committee has criticized the former CEO of FTX for trying to lure him to Washington, D.C., to testify about the collapse of his companies. But the gloves are coming off.

If you’re watching the political dance between House Financial Services Committee Chair Maxine Waters and former FTX CEO Sam Bankman Fried about her testimony before Congress, it’s hard to tell who thinks better. The other is stupid.

Rep. Waters has faced some criticism for being too polite or too naive in her live-on-Twitter conversation to get Sam Banksman Fried to leave the Bahamas to answer committee questions live in Washington, D.C., next Wednesday. .

California’s Democratic committee is investigating the bankruptcy of its FTX exchange and Alameda Research trading firm — which allegedly “borrowed” and lost up to $10 billion of FTX customers’ money.

Bankmann read the opening jingle of his Twitter invitation to Freud:

“@SBF_FTX, we appreciate you being so forthright in your communication about what happened at #FTX. Your willingness to speak publicly to the company’s customers, investors And others will get help. To this end, we welcome your participation. Our hearing will be held on the 13th.

Many in the crypto community criticized Bankman Freud’s interviews with the mainstream media for what they felt were puff pieces, praising his candor, including his large political donations. From angry comments about to more set-the-record advice

Blockchain Association attorney Jack Cheronsky thanked Rep. Waters for holding the hearing, then said:

“I believe the fact-finding will show that @SBF_FTX did not, in fact, come clean in his communications. He committed fraud, full stop.”

Brian Armstrong, CEO of crypto exchange Coinbase had this to say:

“I don’t care how messed up your accounting is (or how rich you are) – if you’ve got an extra $8B to spend, you’ll definitely see it. Accounting error. This Stolen is customer money used in his hedge fund, plain and simple.”

‘um, no’

At the event, Bankman-Fried demurred, responding to Rap Waters with a line he’s been pushing on his “I’m an Idiot, Not a Crook” interview tour, and what’s going on. Claimed complete ignorance. He said:

“Once I learn and review what happened, I will feel it is my duty to appear before the committee and explain. I’m not sure that will happen by the 13th. But when it does It will be, I will testify.”

In earlier interviews with The New York Times, Good Morning America and The Wall Street Journal, Bankman Freud has said that he lost access to FTX and Alameda Records when he stepped down as CEO. So it became difficult to know what happened. .

Because of which Rep. Waters had to push a little harder:

“Based on your role as CEO and your media interviews over the past few weeks, it is clear to us that the information you have so far is sufficient to testify. As you know, the termination of FTX More than one million people have been harmed since. Your testimony will be meaningful not only to members of Congress, but also to the American people. It is important that you attend our hearing on the 13th, and if We are ready to continue the hearing if more information is to be shared later.”

Which, again, doesn’t necessarily mean he did anything wrong. But it’s not stroking his ego either.

The gloves are coming.

Still, Bankman-Fried’s denial can reasonably be read in two ways other than buying her narrative. One, he knows that the consequences of lying to Andrew Ross Sorkin of the New York Times and George Stephanopoulos of Good Morning America are very different from lying to Congress, and he’s trying to get out of it without saying anything. They look like they don’t. Want to spend two hours on the Fifth Amendment. Or two, he thinks he and the rest of the committee are idiots.

It’s worth noting that Chervinsky said he sees a “wide” fantasy gap between the crypto community and the rest of the public. He said:

“With in crypto, there’s a lot of fear that SBF will get away with it, and anger at the media for treating it with kid gloves. Outside of crypto, I don’t see any. People believe that He’s going down and thinks the media was appropriately harsh.”

As for Rip Waters, take a look at his opening statement when Meta (then Facebook) CEO Mark Zuckerberg testified about his Libra stablecoin project in 2019:

“It’s clear…that you believe you’re above the law, and it appears that you’re aggressively expanding the size of your company, and your competitors, women, people of color, anyone, including yourself. consumers, and even our democracy – to get what you want.”

If Bankman-Fried does not agree to testify, Rep. Waters — and likely the rest of the committee — will be less polite. Which is nothing compared to what they’ll hear on December 13, whether they’re in Washington, D.C., or Nassau.

Standard Chartered has warned that bitcoin could fall another 70 percent to $5,000 in 2023.

It is a longshot scenario in the World Bank’s annual set of longshots, which calls out scenarios that its analysts believe have a “non-zero” chance of coming true.

Standard Chartered Bank’s annual surprise list mentions a possible fall in crypto prices, with bitcoin falling to $5,000 in 2023.

While the multinational bank’s 2023 Financial Markets Surprises predictions are far from over – as it focuses on long shots that its analysts believe are nevertheless “undervalued by markets” – it tells That crypto’s woes are far from over.

Bitcoin’s 70% price drop is predicted by many other factors, including the Federal Reserve’s recent, aggressive interest rate hikes, a deteriorating economy, large declines in tech stocks, and especially the including increased contagion. FTX Exchange and its sister trading firm Alameda Research collapsed last month, Eric Robertson, global head of research at Standard Chartered Bank, wrote on Sunday. He said:

“With technology shares comes a drop in yield, and when bitcoin sales drop, losses are done. More and more crypto firms and exchanges find themselves with insufficient liquidity, leading to more bankruptcies.” Investors’ confidence in PIN and digital assets declines.”

In this scenario, gold would rise by 30%.

More bankruptcies

Another series of bankruptcies would follow, as did the failure of the Terra/LUNA stablecoin and the subsequent collapse of crypto-hedge fund Three Arrow Capital in July, which took more than a half-dozen crypto-lenders with it. . So far FTX collateral damage has been limited to BlockFi, the crypto lender that Sam Bankman-Fried tried and failed to save.

But the digital currency group is reportedly struggling to keep its Genesis crypto brokerage out of bankruptcy. Genesis’ lending arm, Genesis Global Capital, froze withdrawals on Nov. 16 and reportedly warned investors that it could face bankruptcy if it can’t raise $1 billion — and there are fears that If it does, it can spread. DCG also owns Greyscale, a struggling bitcoin trust manager.

The overall outcome would be catastrophic for bitcoin, Robertson said, but Robertson emphasized that this is a “non-zero probability” scenario in 2023 and that it would be “materially different from the market consensus or our own fundamentals.” is out.”

Bitcoin is currently about 75% below its November 2021 all-time high of $68,000. Robertson said:

“The question of what’s next for digital assets has never been more difficult to answer since the collapse of Sam Bankman Fried’s FTX exchange and sister trading house Alameda Research. The shockwaves from the explosion have further fueled crypto companies and buffets. Tokens are at risk of dropping prices.

A different view

Bloomberg Intelligence’s new 2023 crypto outlook takes a very different view, suggesting that history will look back to 2022 the same way it did to the 2000-02 bear market for internet stocks.

Senior analyst Mike McGlone believes Bitcoin is a new asset trading at a “steep discount” and wrote:

“That the fastest horse on the road is a leading loser in the midst of the most significant global macroeconomic reset in a lifetime may come as a surprise… A year from now, the Fed is likely to move toward easing. gone, and cryptos seem poised for a resurgence. Their tendency to outperform most traditional assets.”

Arguing that bitcoin is “becoming digital gold” — a comment not widely heard since the crypto crash in late 2021 — McGlone called it “the most severe decline in crypto history.” Despite this, BCGI has risen nearly 200 percent since the end of 2019. .

Compare that to gold, the S&P 500, the Bloomberg Commodity Spot Index and the U.S. money supply as of Dec. 2, which ranged from 20% to 60%, he added:

“Our bias is risk versus reward, with BGCI leaning toward resuming its trend of outperforming.”

Goldman Sachs ‘plans to kill off crypto firms at bargain prices’

While the bank is currently conducting due diligence on a number of crypto firms, Goldman has been tight-lipped about which projects are in Goldman’s crosshairs.

Goldman Sachs is planning to take advantage of the bear market by swooping in to buy crypto firms at extremely low prices.

That’s according to Reuters, which claims the US banking giant has a budget that stretches into the tens of millions of dollars.

Goldman’s head of digital assets, Matthew McDermott, told the news agency that the collapse of FTX underscored why “more credible, regulated cryptocurrency players” are needed.

But some critics may argue that the concept of a legacy financial institution owning crypto businesses undermines why bitcoin was created in the first place.

While the bank is currently conducting due diligence on a number of crypto firms, McDermott was heavily weighed in on which projects are in Goldman’s crosshairs.

That can be counted as a booming development, not least because one of the world’s biggest banks believes the crypto space still has something to offer — crushing confidence. Despite the bankruptcies, and the massive devaluation of the major coins. He said:

“FTX was a poster child in many parts of the ecosystem. But to reiterate, the underlying technology continues to perform.”

USFTC Launches Crypto Ad Crackdown… But Won’t Say Against Whom

The Federal Trade Commission’s newly announced crackdown on misleading crypto ads comes nearly a year after the UK and Singapore launched a tough crackdown.

The Federal Trade Commission is reportedly investigating “several firms” as part of a new crackdown on fraudulent advertising by the cryptocurrency industry.

While the agency wouldn’t divulge further details, Bloomberg reported, it’s probably safe to say that the now-bankrupt FTX, and specifically its FTX American subsidiary — which handled sports stadium naming, team sponsorships and Tom Brady Larry David, who spent millions on hiring celebrity spokesmen – is on the list.

Both it and several of its star-linked partners are being sued by FTX users. The state of Texas’ securities regulator announced last week that it is also investigating several FTX endorsers.
Over the past few years, the US Securities and Exchange Commission has fined celebrity cryptocurrency endorsers, from actors Steven Seagal and boxer Floyd Mayweather to, more recently, Kim Kardashian, six- and seven-figure settlements. What is forced? But the agency says those involved in endorsing cryptocurrencies are securities without properly disclosing that they were paid.

Behind the curve

The FTC’s advertising crackdown comes more than a year after Britain’s Advertising Standards Authority launched an aggressive crackdown on crypto ads that failed to adequately explain the risks of investing in highly volatile cryptocurrencies.

In December 2021, the ASA upheld a complaint against Coinbase Europe, which found that an ad reading “#Bitcoin for £5″ in July 2010 would be worth more than £100,000 in January 2021. Don’t miss out on the next decade – get it. started today on Coinbase” was both “misleading” and “exploited consumers’ inexperience and credulity.”

In January, it recommended that crypto ads be subject to the Financial Conduct Authority’s rules for financial promotions for products such as stocks and insurance. It was approved by the House of Commons last month.

As of March, the ASA had announced “red alert” guidance and issued enforcement notices to more than 50 companies for “misleading and irresponsible” cryptocurrency investment advertising.

January 2022 was also the month Spain launched the EU’s first serious crypto advertising crackdown, introducing rules for cryptocurrency firms, their marketing agencies and social media influencers – later their They faced fines of up to 300,000 euros for not disclosing promotions. or were not “clear, balanced, impartial and non-misleading”, the Financial Times said.

Singapore also launched a major crypto advertising ban in January, with its Monetary Authority of Singapore effectively banning almost all crypto advertising from providers to the general public outside of their websites, apps and official social media accounts. The—and even that—requires strict risk disclosures. It also determined that crypto-ATMs were advertisements, leading to their removal from service.

Nexo has ended business in eight states and said it will leave the U.S. entirely — here’s why

“Regulators are unwilling to coordinate with each other, and insist on taking contradictory positions with each other, creating an impossible environment to work in.”

Crypto lender Nexo is ceasing operations in eight states immediately and will exit the U.S. entirely in a “gradual and orderly manner” — but all customers will be able to withdraw funds without delay.

In an announcement, Nexo said the phase-out of all its products and services in the U.S. “comes after more than 18 months of good faith dialogue with U.S. state and federal regulators that has come to an end.”

Nexo suggested the bankruptcy of many of its competitors, including Celsius, Voyager Digital and BlockFi – as well as the implementation of the FTX exchange “in recent weeks and months” – had led to a “change in the attitude of regulators” to the point that it was ahead of the curve. There does not appear to be any realistic way to he said:

“Regulators are unwilling to coordinate with each other, and insist on taking contradictory positions, creating an impossible environment to operate efficiently and create the expected value for their clients… Now It is unfortunately clear to us that despite rhetoric to the contrary, the US refuses to provide a path forward to enable blockchain businesses.”

The last straw

The straw that broke the camel’s back, Nexo said, was the Consumer Financial Protection Bureau’s (CFPB) announcement on Dec. 1, “insisting that it has jurisdiction to investigate our earned interest product.” is, which the SEC and state regulators have simultaneously insisted is a security. Subject to their jurisdiction.”

The CFPB first indicated its intention to investigate Nexo in December 2021. This was delayed by COVID and Nexo challenging the agency’s authority.

Nexo said the main focus of the challenge was the Securities and Exchange Commission’s February 2022 announcement that competitor BlockFi had agreed to a $100 million fine to settle allegations that its interest-based earnings account was an unregistered There is a sale of securities, no doubt because “the SEC views interest-bearing accounts on crypto-lending platforms as securities.”

Nexo, which stopped paying interest on new Earn deposits when the now-bankrupt BlockFi declared bankruptcy, said the CFPB had no jurisdiction. The CFPB disagreed, saying:

“Nexo Financial is unwilling to admit that the Earn Interest product is a security and does not assert that it (or any other Nexo entity) was a broker-dealer regulated by the SEC.”

The agency added that even if crypto lenders’ earnings products are securities, they fall within an exemption that gives jurisdiction to the CFPB.

what’s next

Nexo has stopped working with clients in New York and Vermont — and as of Tuesday will stop allowing customers in Indiana, Kentucky, Maryland, Oklahoma, South Carolina, Wisconsin, California and Washington to participate in its Earn program. will They can still use other services, such as the Nexo exchange and the CryptoSpend debit card.

Comparing blockchain’s “transformational technology” to the Internet of the early 2000s, Nexo accused the agencies of creating an environment that would drive other crypto businesses out of the U.S., the crypto company said. will:

“Dedicate your time and effort to developing products and services for jurisdictions that understand the importance of blockchain technology in a rapidly digitizing world.”

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