Cryptosphere and financial markets worldwide are waiting with bated breath for the release of the CPI numbers for November, due from the U.S. later on Tuesday. A softening in the inflation readings is expected to provide the Fed with sufficient headroom to go slow on interest rate hikes.
According to latest consensus estimates, CPI is seen falling to 7.3 percent, from 7.7 percent in the previous month. Core inflation – the Fed’s preferred inflation gauge that excludes the volatile food and fuel prices – is seen falling to 6.1 percent from 6.3 percent in the previous month.
Overall crypto market capitalization is currently at $856 billion, registering an overnight uptick of 1.7 percent.
Bitcoin is trading at $17,422.19, having gained 2.67 percent on an overnight basis.
Ethereum is trading at $1,290.35, having gained 3.4 percent in the past 24 hours.
4th ranked BNB (BNB), however has declined more than 3.7 percent overnight amidst reports of large withdrawals on the Binance cryptocurrency exchange. Changpeng Zhao (CZ), the CEO of Binance has tweeted that there was an increase in withdrawals on USDC and that he expected the situation to be restored as the banking channel for swapping from PAX/BUSD to USDC opens in the next few hours. Binance also temporarily paused withdrawals of the USDC stablecoin.
22nd ranked Toncoin (TON) topped the overnight rally with a 10.6 percent surge.
45th ranked Trust Wallet Token (TWT) plunged 20 percent in the past 24 hours.
70th ranked Neutrino (USDN), an algorithmic stablecoin declined 13 percent to trade at $0.718 and losing its peg to the US Dollar.
55th ranked USDD (USDD), another algorithmic stablecoin also remained de-pegged to the Dollar, trading between $0.9803 and $0.9728 in the past 24 hours.
In a major development in the FTX fiasco, the Bahamian authorities have arrested Samuel Bankman-Fried at the request of the U.S. Government. The former CEO of the FTX group now faces an extradition to the U.S. The arrest comes ahead of his scheduled testimony before the House Financial Services Committee on Tuesday.
Meanwhile the U.S.SEC has charged Samuel Bankman-Fried with defrauding investors in the crypto asset trading platform FTX. The SEC’s complaint charges Bankman-Fried with violating the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.
The SEC’s complaint alleges that Bankman-Fried orchestrated a years-long fraud to conceal from FTX’s investors the undisclosed diversion of FTX customers’ funds to Alameda Research LLC, his privately held crypto hedge fund. The special treatment afforded to Alameda on the FTX platform, including providing Alameda with a virtually unlimited “line of credit” funded by the platform’s customers and exempting Alameda from certain key FTX risk mitigation measures was also undisclosed. The risk stemming from FTX’s exposure to Alameda’s significant holdings of overvalued, illiquid assets such as FTX-affiliated tokens also was not revealed or disclosed. The complaint further alleges that Bankman-Fried used commingled FTX customers’ funds at Alameda to make undisclosed venture investments, lavish real estate purchases, and large political donations.
In his testimony before the House Committee, John J. Ray III CEO of the FTX Group listed 8 broad types of unacceptable management practices at the FTX group. Access to customer assets, storing or private keys without encryption, unlimited borrowing by Alameda of funds held at FTX, comingling of assets, lack of proper documentation of investments, absence of audited or reliable financial statements, lack of personnel in financial and risk management functions and finally, the absence of independent governance throughout the FTX Group have been called out as unacceptable management practices.
The turnaround CEO also highlighted 5 core objectives of the restructuring plan viz Implementation of Controls, Asset Protection & Recovery, Transparency and Investigation, Efficiency and Coordination and ultimately the Maximization of Value.
John J. Ray, who has over 40 years of legal and restructuring experience summarized his testimony with five critical findings related to FTX’s operations. First, customer assets from FTX.com were commingled with assets from the Alameda trading platform. Second, Alameda used client funds to engage in margin trading which exposed customer funds to massive losses. Third, the FTX Group went on a spending binge in late 2021 through 2022, during which approximately $5 billion was spent buying a myriad of businesses and investments, many of which may be worth only a fraction of what was paid for them. Fourth, loans and other payments were made to insiders in excess of $1 billion. Fifth, Alameda’s business model as a market maker required deploying funds to various third-party exchanges which were inherently unsafe, and further exacerbated by the limited protections offered in certain foreign jurisdictions.
In another FTX bankruptcy proceedings related development, the U.S. Trustee has filed an objection against the sealing of the names of customers and creditors, and the sealing of the names, addresses and other contact information for customers or creditors who are not individuals. Also, Bloomberg, Inc., Dow Jones & Company, New York Times, Inc. and The Financial Times Ltd have, citing the public’s right of access to the sealed judicial documents, filed an objection to the FTX seeking to keep under seal its list of creditors.
FTX and Binance dominated crypto newsrooms ahead of the crucial CPI data release. Industry watchers would be hoping for a CPI relief to eclipse the recent turbulence in cryptosphere.
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