News Updates August 19, 2022

1. Can exchanges create imaginary Bitcoin to dump price? Crypto platform exec answers

Serhii Zhdanov called for broader regulation in offshore crypto exchanges that do not go through financial audits.

propositions of Bitcoin (BTC) is that no one can create more of it apart from its fixed supply. However, an executive from a crypto exchange made a bold claim that some exchanges can create and sell BTC that's only in their system, not on the blockchain, to manipulate the market. 

In an interview with Cointelegraph, Serhii Zhdanov, the CEO of crypto exchange Exmo, shared his beliefs that market manipulation is still prevalent in the digital asset space and gave an example of how it can happen.

According to the executive, if anyone wanted to dump the market, it’s possible to go to an offshore exchange that does not go through financial audits and ask for $100 million worth of BTC and use $10 million Tether (USDT) as collateral. He explained that:

To get their profits, the market manipulators can then profit from arbitrage according to Zhdanov. “After the price is down, they buy the same amount of Bitcoin at a much lower price and make a profit,” he added.

The CEO said that fighting and preventing these potential events require stronger regulatory policies that are as comprehensive as the stock market. Zhdanov highlighted that offshore exchanges must also be regulated in the same manner as tier one exchanges or have transactions between regulated and offshore exchanges be limited. With this, the executive believes that the market will be a better place for investors of all sizes.

 *Analyst claims that exchanges sell your Bitcoin, crypto trading platforms respond*

Additionally, the executive pointed out that one of the barriers to mainstream crypto adoption is the money laundering concerns. According to the CEO, compliance and more comprehensive regulation will make these concerns go away. He said:

2. Bitcoin Falls Suddenly Sending Market Into Uncertain Territory

Bitcoin has experienced a sharp fall on the day with a 7.2% slide to its current price of $21,500. As much as an 8% price reduction was seen earlier. Practically the entire crypto market has followed suit.

The yoyo that is crypto continues to bounce around in the midst of extremely uncertain macroeconomic times. The rally that had begun at $17,500 was making steady higher highs and higher lows.

However, this morning’s fairly emphatic dump has sent the market into the jitters territory again, and all are wondering if the strong support of the 200 weekly moving average will be held by the end of the week, or if bitcoin is going to break it and head down to its previous local low.

CZ, the CEO of Binance, tweeted out a vaguely enigmatic statement with his view of the situation:

Nevertheless, given that the rally was in its ninth week and that from bottom to top, the bitcoin price had increased 43%, the market was probably overdue for a correction.

On Bitcoin Twitter, some are pointing to the bitcoin realised price, stating that $21,750 is the current figure where most holders of bitcoin start to see their positions go underwater. At time of writing bitcoin has just dipped below this price and is heading down strongly.

Notwithstanding, the RSIs for all the medium term time frames out to the daily are starting to enter oversold territory, so look for bitcoin to bounce within the next day or so.

3. Crypto: Bitcoin Price - Technical Analysis - 19/08/22

Relevance up to 10:00 2022-08-20 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

BTC has been trading downside as I expected. The price has reached the first downside objective at $22.600 and is heading towards next targets. Trading recommendation: Due to the strong supply and broken rising wedge pastern, I see further drop in play. Watch for potential selling opportunities on the intraday rallies with the downside objectives at $21.000 and $19.000. MACD oscillator is showing fresh new momentum to the downside, which is another confirmation of the momentum. Key resistance is set at the price of $25.000

Besides CySEC, Instant Trading EU Ltd. is also supervised by the Czech National Bank (CNB), the Slovak National Bank (SNB), and the Polish Financial Supervision Authority (KNF). Consequently, InstaForex has branches in the Czech Republic, Slovakia, and Poland, where it provides support in local languages. InstaForex is a member of the Investor Compensation Fund (I.C.F) which is an additional security for the client's funds. Besides, the broker ensures the Negative balance protection. So, the reliability and trustworthiness of this broker raise no doubts.

4. Crypto market bloodbath leads to over $500M in liquidations in 24 hours

Data from crypto analytic firm Glassnode shows future long liquidation of BTC touched a new 8-month high as BTC price crashed below $22,000 on Friday.

The crypto market registered a major slump on Friday, resulting in major cryptocurrencies losing key support and falling to new monthly lows after a prolonged bullish surge over the past month.

Bitcoin (BTC), which was looking to break through $25,000 resistance last week, fell below $22,000 to register a new two-week low of $21,747. Ether (ETH), the second largest cryptocurrency, has surged past $2,000 in the run to the Merge but slumped by 6% over the past 24 hours to register a new weekly low of $1,726.

The flash crash after weeks of bullish momentum also saw 157,098 traders getting liquidated in the past 24 hours resulting in liquidation of over $551 million. Data from Coinglass indicate Bitcoin traders lost over $203 million in liquidations, followed by Ethereum traders at $140 million.

The following liquidation chart indicates that the number of liquidated long positions outnumber the short ones by a significant margin, indicating the market sentiment was highly bullish until the flash crash. The value of short positions liquidated was only $41 million against $398 million in long positions

BTC futures long liquidations reached an 8-month high of $84,934,697.05 on OKX (formerly known as Okex), breaking the previous high of $48,630,183.66 observed on May 5, 2022.

The sudden plunge in the crypto market is being attributed to the Fed’s expected interest rate hike in September. August consumer price index (CPI) data came lower than expected, leading to a bullish surge in crypto and forex markets alike.

 *Bitcoin 'very bearish' below $22.5K says trader as BTC price dives 6%*

Federal Reserve Bank of St. Louis president James Bullard said he would favor a 75 basis points increase. An interest hike by the fed next month could lead to another downturn. A similar interest rate hike of 75 basis points in June led to crypto market turmoil after an initial price surge.

5. Biden is hiring 87,000 new IRS agents — and they're coming for you
The Internal Revenue Service is hiring a fleet of new agents. And they’re probably coming for you — regardless of your income level.

The Inflation Reduction Act, signed into law this month by President Joe Biden, empowers the IRS with nearly $80 billion in new funds. The world’s most powerful tax collection agency is using the money to go on a hiring spree to fuel much tougher enforcement efforts.

It is widely assumed that the audits will be brutal and widespread. Taxes start with tax returns, which must be signed under penalties of perjury. The Biden administration has said that the audits on steroids are for fat cats who have escaped having to pay their fair share for too long. The administration has suggested the IRS would perform no new audits on anyone making less than $400,000 annually. Republicans tried to include that in the law, but every Senate Democrat voted against the amendment, as well as IRS audit protection for those earning less than $400,000.

In other words, American taxpayers at every income level are fair game regardless of income. So buckle up, and think about whether your taxes — and records — are vulnerable. How would they look under a microscope? Tax returns must be signed under penalties of perjury. What’s more, if you try to change that language, the IRS says it doesn’t count as a tax return — which means your statute of limitations on an audit never begins. You can be audited forever.

6. South Korean Kok Play Token Masterminds Reportedly Face Prosecution Probe, Investors 'Must Escape Now'

South Korean prosecutors are reportedly set to investigate the company behind an Ethereum (ETH)-based altcoin named Kok Play over allegations of fraud.

The coin is, per its white paper, the brainchild of the Kok Foundation, and has been listed on a number of large international crypto exchanges. Its value grew by a whopping 2,205% in 2021, but the coin has since fallen from over USD 6.50 to under USD 0.30 at the time of writing (9:42 UTC on Friday morning), per CoinMarketCap data.

The foundation states that the coin helps power content creators, and has touted the launch of a K Stadium platform that could one day rival the likes of Netflix. It has also spoken of floating K Stadium on the Nasdaq stock exchange.

But investors have made allegations about the way tokens are “mined” and “staked” on its platform. According to the South Korean media outlet MTN, investors are invited to send tokens such as ETH to a Kok Play account on a smartphone-based “wallet” platform – and can enjoy “guaranteed” monthly staking rewards of between 3% and 12%. 

The project also operates a “tiered membership” system whereby users who refer additional members can allegedly receive higher rewards.

On the foundation’s Twitter account, all appears to be rosy, with the coin apparently powering the production of a web-based cartoon series (webtoon) and a drama series.

But, MBN reported, a group of South Korean individuals claiming to be investors have filed a complaint with the police, claiming they have struggled to make withdrawals from the platform.

The case had initially been dismissed by the police, which included allegations against four executives, including the foundation’s Chief Technical Officer, but has now been referred to the Seoul Central District Prosecutors’ Office. 

The investors’ legal team, the law firm Right Law, objected, claiming that police had failed to investigate the case thoroughly enough. Such objections are rarely accepted “unconditionally,” a Right Law attorney was quoted as stating – unless prosecutors believed police officers have made major errors in their investigations.

Another law firm, Daegun, which specializes in fintech-related cases, wrote in a blog post that it was preparing a class action lawsuit against the company, and urged users of Kok Play to withdraw any funds they have on the platform. The legal firm also asked any investors who were struggling to obtain their funds from the platform to come forward and join the suit.

Controversy” surrounding the coin began in May last year, MBN reported, when a group of 97 investors in Japan attempted to sue the foundation – claiming that they could not access their funds. That case is still ongoing.

Then, in May this year, a group of expat South Koreans also vented their grievances. The Korean-language Canadian media outlet Korea Times Daily reported that Korean-Canadian users were experiencing what the legal firm termed “problems.”

The lawyers wrote that “due to the nature of” the Kok token’s “Ponzi”-like structure, the possible “damages” to investors could “be enormous.”

They added that Kok platform users are warned that if they withdraw their funds, they will not be allowed to return – a fact that makes many “hesitate” about making withdrawals.

Investors must also pay “cancellation fees” in certain cases, and investors must pay heavy penalties if they attempt to withdraw funds within a month of making their investments.

7. Jim Cramer Urges SEC to Crack Down on Crypto Pump-and-Dumps

CNBC's Jim Cramer has urged the U.S. Securities and Exchange Commission to crack down on cryptocurrency pump-and-dump schemes on Thursday's episode of his "Mad Money" show. Crypto pumping is one of the most "troubling issues" that the securities regulator should be pursuing right now, according to Cramer.

He claims that there are tons of cryptocurrencies that are being propped up by their creators and end up being liquidated into the hype. "I think it's vital for the SEC to pursue these targets aggressively," Cramer said. He fears that Congress may put crypto under the purview of the Commodity Futures Trading Commission (CFTC), the SEC's sister regulator that would have a much less aggressive approach toward cryptocurrencies. A new bill tabled by Sens. Kirsten Gillibrand (D-NY)  and Cynthia Lummis (R-WY) would give Senators such authority.

That, according to Cramer, would be a big mistake given that illegal behavior is rampant within the cryptocurrency space. As reported by U.Today, SEC Chair Gary Gensler also criticized the attempt to defang his agency, claiming that the bill would affect capital markets in a negative way.

The CNBC host also believes that the SEC should take action on special purpose acquisition companies (SPACs) since it is "unfair" to subject the general public to securities with such "massive defects" even if they are disclosed. In early July, Cramer predicted that the cryptocurrency industry had much more room to fall following a crash in June. Even though major coins actually overperformed that month, they are once again on the ropes due to macroeconomic uncertainty.

Earlier today, the Bitcoin price plunged to $21,404 on the Bitstamp exchange just days after reclaiming $25,000 due to exuberance caused by lower-than-expected inflation data.

8. Crypto Lender Celsius' Collapse Into Bankruptcy Should Be Probed, US Says

Some of the highest profile and controversial bankruptcies in history, including Enron and Lehman Brothers, have included the appointment of an independent examiner.

U.S. government officials asked that an independent examiner be appointed to look into crypto lender Celsius Network's collapse into bankruptcy, seeking the sort of investigation previously deployed in the high-profile restructurings of Enron and Lehman Brothers.

The U.S. Trustee office, which oversees bankruptcy matters, said there are "numerous questions" about Celsius' operations and its financial health, as well as how its management allowed it to enter bankruptcy, according to a court filing Thursday.

An independent probe, which the judge overseeing the case would have to approve, would answer questions about the company's financials and address "significant transparency issues" in the bankruptcy case, according to the filing.
"There is no real understanding among customers, parties in interest, and the public as to the type or actual value of crypto held by the Debtors or where it is held," the U.S. Trustee said. "An independent examiner is necessary here to investigate and report in a clear and understandable way on the Debtors’ business model, their operations, their investments, their lending transactions, and the nature of the customer accounts to ensure public confidence in the integrity of the bankruptcy system and to neutralize the inherent distrust creditors and parties in interest have in the Debtors."

In the controversial Enron and Lehman cases, an examiner dove into the causes of their spectacular falls. With Enron, the examiner concluded that senior officials at the company were in "a circle of responsibility for Enron's financial demise," according to a 2003 Associated Press article. "Lehman Brothers used accounting sleight of hand to conceal the bad investments that led to its undoing," the New York Times said of a bankruptcy examiner's report in 2010.

The U.S. Trustee noted that Celsius took out a third-party loan but did not identify who the lender was, what the collateral was or what kind of loan was issued. Moreover, this was even after the lender revealed it could not return the collateral.
"No description of the types of claims the Debtors may have against this lender are made in the Mashinsky Declaration, nor is there an explanation for why legal recourse was not sought," the filing said, using the last name of Celsius CEO Alex Mashinsky. "There is also no description of any investigation by the Debtors into its legal recourse."

Celsius' customers also do not trust the company, and have said so in filings published to the court docket, the Trustee's office said.
Appointing an independent examiner "would be in the best interest" of both Celsius, its creditors and equity holders, the filing said.

9. Philippine Regulator Warns the Public of Engaging With Foreign Crypto Service Providers.

The central bank of the Philippines, the primary regulator of the country’s crypto sector, has warned investors about engaging with unregistered and foreign crypto service providers. They “may present additional challenges on enforcing legal recourse and consumer protection and redress mechanisms for local customers, among others,” the regulator said.

The Philippine Central Bank’s Crypto Warnings
The central bank of the Philippines, Bangko Sentral ng Pilipinas (BSP), issued a public warning Tuesday regarding unregistered and foreign crypto service providers. In the Philippines, the central bank is the primary regulator of the crypto sector.

The announcement states:

The Bangko Sentral ng Pilipinas (Bangko Sentral) strongly urges the public not to deal with virtual asset service providers (VASPs) that are either unregistered or domiciled abroad.

The central bank’s website shows that 19 VASPs have been registered as of June.

Besides the risk from price volatility associated with virtual assets (VAs), the central bank explained that VASPs that are based abroad “may present additional challenges on enforcing legal recourse and consumer protection and redress mechanisms for local customers, among others.”

The Bangko Sentral emphasized:

VA dealings are generally considered as high-risk activities which may result in huge financial losses due to price swings.
Furthermore, the central bank warned that the government does not guarantee protection against financial losses stemming from crypto price fluctuations. “The public should exercise caution, conduct their own due diligence, and always be mindful of the risks prior to engaging with VA-related activities,” the regulator emphasized.

 
Bangko Sentral ng Pilipinas has urged the public to immediately report unlawful activities facilitated through cryptocurrencies and/or crypto service providers to the central bank.

Last week, the central bank announced that it will stop accepting new VASP license applications for three years, starting Sept. 1. The regulator explained that it “aims to strike a balance between promoting innovation in the financial sector and ensuring that associated risks remain within manageable levels.”