The Bahamas financial regulator embezzled $3.5 billion from the bankrupt FTX exchange. Ex-FTX exchange head Sam Bankman Fried has more and more problems
The Bahamas Securities Commission froze $3.5 billion in cryptocurrency accounts held by the FTX exchange.
The Bahamas’ financial regulator has frozen $3.5 billion in cryptocurrencies held by the now-bankrupt cryptocurrency exchange FTX. The Bahamas Securities Commission announced this in a press release.
FTX previously moved to the Bahamas. According to the regulator, the decision to block is due to the risk of cryptocurrency theft by former employees of the trading platform. The commission decided to limit FTX’s ex-employees’ access to the exchange’s servers and confiscated $3.5 billion in cryptocurrencies. The financial regulator will hold FTX’s assets until the Supreme Court of the Bahamas orders the return of assets to the exchange’s customers and creditors.However, when this may happen is unclear.
It is noteworthy that in mid-November 2022, the Supreme Court of The Bahamas ordered FTX to cover all costs, which the financial regulator will take over in the bankruptcy of the exchange. The amount of the fees and their frequency remain unclear.
In early November, FTX declared bankruptcy due to a large shortage of assets to cover liabilities to customers. As the media found out, FTX exchange founder Sam Bankman Fried arbitrarily used customer assets on the trading floor to cover the debts of an affiliate firm with the exchange, Alameda Research.
The head of Alameda Research Caroline Allison, admitted that the trading firm sometimes used the funds of FTX clients for their transactions. The extent and number of such trades, however, is unclear. According to her, Bankman-Fried was aware of such a loophole. Both agreed to hide it from lenders and made false financial statements to hide the amount of Alameda loans.
According to the former head of Alameda Research, she understood that it “was wrong” to take perpetual loans from FTX without any risk management or collateral. She said she was aware of the detrimental nature of the practice as early as 2019. FTX co-founder Gary Wong said he was “obligated” to make changes to the crypto exchange’s code. It is not clear who exactly was obliged.
We previously reported that FTX and Bankman-Fried ceded $200 million of FTX customers to private equity.
Cryptotraders lost more than $250,000,000 in liquidations after Fed rate hike
Cryptotraders had a tough day: almost 68,000 positions were liquidated on exchanges in the last 24 hours, and the total volume of liquidations exceeded $257,000,000. All this happened against the news of the US Federal Reserve’s rate hike and another Securities and Exchange Commission regulatory action against cryptocurrencies.
Cryptotraders lost $132,000,000 in BTC
Bitcoin, Ethereum, and Ripple were the leaders in the number of forcibly closed positions. BTC liquidations totaled almost $132,000,000; Ethereum traders lost $51,000,000. XRP positions accounted for about $8,000,000 of liquidations. Bitmex exchange executed the largest order of $7.39,000,000.
Cryptocurrency market capitalization has declined 2% in the last 24 hours, but is still above the $1 trillion mark.
The weekly CoinShares report also recorded a massive outflow of funds for six consecutive weeks. During that period, nearly $500,000,000 was withdrawn from cryptocurrency platforms, with $113,000,000 coming from bitcoin. Analysts at the company believe the outflow is due to liquidity needs during the banking crisis rather than a negative outlook. The company mentions that a similar scenario was seen in March 2020 amid a COVID-19-induced panic.
Regulators continue to hunt the cryptobusiness
Another reason for the increased volatility in the market has been harsh action from U.S. regulators. Last night it became known that the U.S. Securities and Exchange Commission sued cryptomagnate Justin Sun, accusing him of fraud and market manipulation.
The SEC also issued a notice of wrongdoing against Coinbase, the largest U.S. cryptocurrency exchange. The securities regulator sued Coinbase Global Inc, for some of the products it offers.
We previously reported that Bitcoin (BTC) tests $28,000, but onchain metrics urge caution.
Binance was caught circumventing KYC to register Chinese clients
Employees of the cryptocurrency exchange Binance help clients from China to bypass compliance and verification. CNBC writes about it, citing hundreds of corporate emails from exchange employees on Discord and Telegram. It is reported that Binance has helped over 200,000 users register, bypassing its own security system. One case describes correspondence between a user from China and a Binance employee.
The employee under the pseudonym yaya.z suggested the user from China turn on a VPN, register as a Taiwanese resident and then return the location to China. Binance employees also advise customers not to use VPN services from the U.S., Hong Kong and Singapore, because the exchange does not provide services in those regions, writes CNBC. At the same time, Binance freely processes applications from U.S. email providers like Gmail or Outlook for registration.
The exchange even offers specialized mobile applications for customers from China. A CNBC reporter could download a special mobile application from Binance via email. At the same time, no VPN was needed to download the app, as the download was conducted through the domain of binance[.]com. It is also alleged that the exchange still verifies users with Chinese phone numbers.
An exchange spokesperson denied the existence of a special Chinese version of the mobile application. The exchange also added that it has improved the system to identify users from banned regions. CNBC notes that after providing evidence, Binance removed employee messages from corporate chats to circumvent KYC.
We previously reported that the Ethereum (ETH) price crossed the $1,800 mark, opening the way to $2,000.
Why cryptoanalysts expect bitcoin to fall
The market remains in a bearish trend and bitcoin (BTC) will resume its fall and test $16,000. There are two reasons:
The first statement can be confirmed or disproved by a technical analysis of the cryptocurrency market, but there is not enough additional information for the second.
The market capitalization of altcoins (ALTCAP) does hold nearly $605 billion of resistance. Although ALTCAP has risen above it several times, it didn’t develop above this area.
However, the daily RSI has broken through the bearish divergence trendline (green line). Such a breakout often precedes significant reversals into a bullish trendline. As a result, ALTCAP will move higher towards the $680B resistance area. If not, ALTCAP could fall back to the $518B support area.
There are also those who argue that bitcoin will test the $10000-$11000 area because there is a CME price gap that needs to be filled. The gap refers to the difference between the closing price of bitcoin futures on the Chicago Mercantile Exchange (CME) on Friday and the opening price on the following Monday.
We previously reported that Hong Kong has allocated another $50,000,000 to the crypto industry.
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