Cryptocurrency
Binance exit aftershock: Can one resignation tip the crypto trust scales?
On Sept. 13, news broke of yet another high-level executive parting ways with Binance.US.
This time, it was none other than Brian Shroder, the CEO and president of the exchange, who, after two years in the hot seat, was heading for a “deserved break,” as Binance CEO Changpeng “CZ” Zhao was quick to announce on X (formerly Twitter) that same day.
There has been some speculation regarding recent management changes at @BinanceUS. Brian Shroder is taking a deserved break after accomplishing what he set out to do when he joined two years ago. Under his leadership, https://t.co/hSHrrlF7o7 raised capital, improved its product…
— CZ Binance (@cz_binance) September 15, 2023
The news coincided with the announcement that around 100 people had also lost their jobs that day — about a third of the workforce.
A massive outflow of funds followed, with the highest being just over $66 million in a single transaction. Zhao was keen to underline that Shroder’s departure was amicable and that he had achieved everything he had set out to do.
“Ignore the FUD,” was the call from the parapets, the common plea for calm when any kind of disruption occurs.
In an industry strained and battered by tales of fraud and wrongdoing, however, this call went unheeded once again. The days since the news broke have seen significant outflows from Binance to platforms such as Jump, AU21 Capital, QCP Capital and Wintermute.
Once again, it raises issues that have long dogged the cryptosphere, chiefly those of influence and trust. There are few other sectors where layoffs or a change at the top of a company can have such an impact.
Such things are generally accepted as the natural ebb and flow of the business world, and while there may be a momentary blip, more often than not, things are back on track fairly soon afterward.
Even in this instance, from the chart, it is apparent that there were still sizeable inflows to Binance during the period. The two incidents may be completely unrelated. With so many factors involved, no one can say for sure.
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Jim Graham, a cryptocurrency analyst at think tank PsyBold, told Cointelegraph: “While we can’t attribute the shift in funds wholly to last week’s announcement, we most certainly can’t reject it, either. There have been several key managerial changes in the past few months, and virtually all of them have been accompanied by a dip in holdings on the platform. Trust remains a massive obstacle for crypto platforms, and it’s an obstacle they are failing to overcome.”
Money is a valuable commodity, and even the hint that it may be in jeopardy is reason enough to react quickly and decisively.
As the saying goes, trust is earned, not given away, and the recent negative events involving crypto platforms have done little to raise that level of trust. Graham added:
“Crypto platforms need to be on par with banks regarding trust. Investors need to know that entrusting their money to them is a good, safe idea, not a risky one. Unfortunately, they are nowhere near that, and until we reach that level, these spikes are inevitable.”
So, how do the platforms get to that level of trust? Most people would simply say, stop doing bad things. Once crypto platforms act more like banks, people may trust them more.
But this is much easier said than done. For one, most banks have been around for years, some even hundreds of years. Trust has an element of longevity to it, which people like. The general feeling is if something or someone has acted responsibly and transparently for a long time, there is more of a chance that they will continue to do so.
Crypto platforms don’t have that luxury, of course. Most can only look back on a few years of existence; the only pledge they can give is their word.
On top of that, there is the age-old discussion of regulation. Licensed banks are regulated. That means an authority monitors what they do and is there to step in if things go wrong.
The last thing such an authority or the bank wants is a bank run, as this represents a complete breakdown in trust for all concerned, with the consequences that go with that. Once that has happened, it is tough to win that trust back, as witnessed during the economic crisis of 2008.
In the unregulated world of crypto exchanges, there is currently a stalemate. Some investors are in the middle, clamoring for regulation, fearing for their investments. In contrast, others are vehemently opposed, stating regulation is the very thing cryptocurrency was created to avoid.
And on either side are the exchanges and the authorities, each accusing the other of this and that in what seems like an endless spiral, with neither ready to back down.Sandra McAllister, an attorney specializing in tech litigation with Clifford Chance, told Cointelegraph:
“The need to clarify the legalities around trading cryptocurrencies, particularly in the U.S., is vitally important for the future of the industry, but the protracted processes and tactics being employed are damaging, for both sides, and that, in turn, is turning investors away.”
“The power of social media is also a pressure on the market. The bounce in the Ripple price we saw in July following the court ruling on XRP underlines that perfectly. The decision was anything but conclusive and, in reality, nothing more than a step along the path, but it was blown up on social media as a huge victory that drove up prices. We only have to see where the Ripple price is today to see how much of a victory it actually was,” she said.
Recent: Stablecoin exodus: Why are investors fleeing crypto’s safe haven?
Moving assets around between different exchanges or different assets is nothing new or unusual, of course. In times of economic downturn, funds tend to flow toward the “safer” havens, such as bonds and gold, before reverting to more profitable areas when things pick up.
Graham commented, “While diversifying holdings and being ready to react to ensure you are not unduly affected by negative pressures is sound financial advice, the problem facing crypto holders right now is which platform is safer than another. The FTX demise showed us that ‘too big to fail’ does not apply, so what remains?”
Cryptocurrency
BTC Records Best Week Since March Amid US CPI Announcement and Big Names Buying Bitcoin ETFs: This Week’s Crypto Recap
A lot can change in the cryptocurrency market within the span of a week and it indeed did in the past seven days. It was just last Friday when bitcoin was struggling to remain above $60,000 after another leg down, but the landscape is quite different now.
The changes started to happen during the weekend when BTC remained above the aforementioned level and even increased slightly to around $61,000. However, the first big move came on Monday when the cryptocurrency pumped to just over $63,000.
It failed to sustain that rally and retraced hard on Tuesday amid some Coinbase issues and perhaps due to pressure from the upcoming US CPI announcement on Wednesday. Once that came out, though, and the reality met expectations, bitcoin started climbing rapidly.
It jumped by several grand and shot above $66,500 as the inflows to the ETFs accelerated as well. The asset retraced slightly yesterday to just under $65,000 but went back on the offensive today. As a result, BTC returned to over $66,000, marking its best week since the early days of March and making investors greedy again.
Speaking of a weekly scale, some of the most impressive gainers from the larger-cap alts include Solana, which skyrocketed earlier this week, and Chainlink, which tapped a multi-month peak of over $16.
Market Data
Market Cap: $2.533T | 24H Vol: $78B | BTC Dominance: 51.6%
BTC: $66,455 (+5.35%) | ETH: $3,086 (+2.1%) | BNB: $580 (-2.61%)
This Week’s Crypto Headlines You Can’t Miss
Bitcoin’s Fundamentals Remain Strong Amid Market Volatility: Bitfinex, Despite bitcoin’s retracement from the end of last week, Bitfinex highlighted in a report from Monday that all the network’s fundamentals have remained strong, even though the difficulty had declined slightly.
The Floppening: Ethereum Can’t Stop Losing Ground To Bitcoin. The graph above shows that ETH has failed to produce gains similar to those of BTC. In fact, the second-largest cryptocurrency has declined in value a lot compared to bitcoin in the past several months, making the so-called ‘flippening’ more of a distant dream than a potential reality.
Morgan Stanley Reveals $269 Million Investment in Grayscale’s GBTC. Publicly listed US giants had to disclose their financial activities during the first quarter of the year in separate filings to the US SEC. As such, several big names, such as Morgan Stanley, outlined multi-million dollar investments in different Bitcoin ETFs.
Wisconsin State BTC Investment Could Cause Chain Reaction From Other States. One of the other notable and perhaps surprising names on the BTC bandwagon list was the State of Wisconsin Investment Board (SWIB). Its $164 million investment in Bitcoin ETFs raises the question of whether other similar entities will follow suit.
CME Group Plans Spot Bitcoin Trading Amid Rising Wall Street Demand. CME Group, a traditional finance giant that has a rich history with the cryptocurrency industry, is reportedly looking into entering the spot Bitcoin trading market, something that the firm has avoided in the past. This could create lots of competition for established names like Coinbase and Binance.
ShibaSwap 2.0 Goes Live On Shiba Inu’s Layer 2 Blockchain. Shiba Inu’s ecosystem has been among the most active in the past year or so, and this week marked the migration of the native decentralized exchange to Shibarium in the form of ShibaSwap 2.0.
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U.S. Senator Cynthia Lummis recently posted “Bitcoin laser eyes” on X, showing her support for laws supporting the cryptocurrency.
The move follows the passing of legislation H.J.Res. 109 in the Senate, which aims to overturn the SEC’s Staff Accounting Bulletin (SAB) No. 121.
Senator Lummis Advocates for Bitcoin Legislation
U.S. Senator Cynthia Lummis, representing Wyoming, is well-known for her advocacy of Bitcoin. She views the asset as a dependable store of value and a safeguard against inflation. Serving on the Senate Banking Committee, she aims to enforce a regulatory framework that fosters crypto innovation while safeguarding consumers.
We are so ₿ack. pic.twitter.com/ckHmXMHFL8
— Senator Cynthia Lummis (@SenLummis) May 16, 2024
The Senate recently passed legislation targeting the dismantling of SAB 121, which imposes stringent restrictions on financial institutions, preventing them from acting as custodians for digital assets like Bitcoin. Under the Congressional Review Act, H.J.Res. 109 aims to eliminate these barriers, allowing regulated financial firms to provide custody services for cryptocurrencies.
Prior to the legislation’s passage, Senator Lummis vocalized her support for overturning SAB 121. She denounced it as a rule disguised as accounting guidance crafted and implemented by SEC staff without majority commission approval.
Recently, Senator Lummis, along with Senator Ron Wyden of Oregon, penned a letter to U.S. Attorney General Merrick Garland expressing concerns over the perceived divergence in the Department of Justice’s interpretation of “money transmission” regulations. They argued that this deviation from FinCEN’s established definition could criminalize fundamental aspects of crypto networks, affecting responsible financial innovation in the U.S.
White House Cites Investor Protection Concerns
Meanwhile, the White House has clearly stated its opposition to the passed legislation. A recent statement indicated that President Biden would veto the bill if it reached his desk. He might argue that overturning SAB 121 would undermine the SEC’s efforts to protect investors in the crypto-asset markets and safeguard the broader financial system.
Critics of SAB 121 believe that the rule is excessively restrictive and limits financial institutions’ ability to meet the growing demand for Bitcoin services. They argue that these institutions, with their established compliance frameworks and security protocols, are well-equipped to manage the risks associated with digital asset custody.
Despite the Senate’s approval, the future of H.J.Res. 109 remains uncertain due to the potential presidential veto. If President Biden follows through on his veto promise, it would stop the resolution’s progress, maintaining the current restrictions on financial institutions’ custody of digital assets. Biden has the option to sign the bill into law, veto it, or take no action, in which case the bill would become law without his signature.
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Cryptocurrency
LINK Explodes 18% Daily, BTC Maintains $66K as Bitcoin ETF Inflows Continue (Market Watch)
Bitcoin’s price tapped a multi-week high yesterday at around $66,600 before it was pushed down by about a grand but has reclaimed the $66,000 level as of now.
Several altcoins have continued their recent rally, with LINK taking the main stage following a massive 18% surge.
BTC Back to $66K
The primary cryptocurrency had a tough end of the previous business week when it was brought down to just inches above $60,000. Instead of going below that coveted round-numbered milestone, though, the asset bounced off during the weekend and especially on Monday.
The bulls initiated an impressive leg-up at the start of the current week that drove bitcoin to just over $63,000. It failed there at first, dropping to $61,200 amid some Coinbase issues, but went back on the offensive on Wednesday after the US announced the CPI numbers for April.
As the spot Bitcoin ETF inflows kept increasing on Wednesday and Thursday, BTC’s price soared to a three-week high of just over $66,500. The asset retraced slightly yesterday evening but has jumped back above $66,000 as of now amid the fourth consecutive day of positive flows into those ETFs.
Its market cap remains slightly above $1.3 trillion, but its dominance over the alts has taken a hit and is down to 51.7%.
LINK Skyrockets
Most alternative coins turned green yesterday in a similar fashion to bitcoin. While some, such as BNB, DOGE, TON, TRX, and SHIB, are slightly in the red now, most others have kept climbing.
Ethereum and Ripple are up by 0.5-1%, which has helped the former maintain $3,000 and the latter $0.5. More gains come from the likes of SOL, ADA, AVAX, DOT, BCH, HBAR, and ICP.
However, Chainlink has stolen the show from the larger-cap alts. LINK has skyrocketed by more than 18% in the past day and now trades above $16.
The total crypto market cap has remained relatively still on a daily scale at just over $2.5 trillion on CG.
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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.
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