News Updates August 20, 2022
1. Bitcoin Now Below "Realized Price" as Price Dips Below $21K, What This Implies
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According to on-chain analytics firm Glassnode, "Bitcoin prices have broken back below the realized price after 23 consecutive days above the market cost basis." The realized price currently sits at $21,700, reflecting the aggregate acquisition price, valued at the time coins last moved on-chain.
Following this, according to Glassnode, "the market could be considered to be in aggregate loss." The short-term picture remains uncertain due to BTC prices currently being below the realized price. The cryptocurrency fear and greed index has shifted back to "fear," reflecting market trepidation.
The realized price of $21,700, which indicates the average value of the BTC coin supply as of the most recent on-chain transaction, was breached Aug. 19 when Bitcoin hit a low of $20,910. According to CoinMarketCap, the price of Bitcoin is currently down marginally during the previous 24 hours to $21,315.
2. United Texas Bank CEO wants to 'limit the issuance of US dollar-backed stablecoins to banks'
Scott Beck, the CEO of United Texas Bank, claimed that stablecoin issuers like Circle were “effectively sucking deposits out of the banking industry.”
*Scott Beck, chief executive officer of United*
Texas Bank, called on members of the state’s blockchain working group to recommend policy for leaving stablecoins to banks rather than crypto firms.
Speaking before the Texas Work Group on Blockchain Matters in Austin on Friday, Beck suggested limiting the issuance of U.S. dollar-backed stablecoins to licensed banks rather than issuers like Circle. The United Texas Bank CEO cited a November report from the President’s Working Group on Financial Markets, in which the group said stablecoin issuers should be held to the same standards as insured depository institutions including state and federally chartered banks.
If such stablecoins are defined to be ‘money’, banks are the proper economic actor to issue and manage stablecoins,” said Beck. “Banks have the expertise and legal framework for handling money, and unlike today’s stablecoin actors, banks are highly regulated at both the state and federal level.”
3. FDIC Orders Crypto Exchange FTX US, 4 Others to Cease 'Misleading' Claims
The five companies "made false representations" suggesting crypto products might be FDIC-insured.
The U.S. Federal Deposit Insurance Corp. (FDIC) published five cease-and-desist orders Friday, including one to crypto exchange FTX US, alleging they mislead investors by suggesting their accounts are insured through the government agency.
The Cryptonews.com, Cryptosec.com, SmartAsset.com and FDICCrypto.com websites were also directed to cease these alleged misrepresentations. The FDIC said these "companies made false representations" that suggested their products might be insured by the agency. The FDIC covers federally regulated bank accounts, up to $250,000 per account.
The FDIC previously ordered now-bankrupt Voyager Digital to cease making claims that implied its customers' funds might have been insured by the FDIC. It later issued a broader warning to the crypto industry at large, saying FDIC protections extend to banks but not to crypto companies that have bank accounts
Friday's letters said several other websites were making specific inaccurate claims about which crypto companies had FDIC insurance.
The Federal Deposit Insurance Act (FDI Act) prohibits any person from representing or implying that an uninsured product is FDIC-insured or from knowingly misrepresenting the extent and manner of deposit insurance. The FDI Act further prohibits companies from implying that their products are FDIC-insured by using 'FDIC' in the company’s name, advertisements or other documents," the agency said. "The FDIC is authorized by the FDI Act to enforce this prohibition against any person."
In a tweet that has since been deleted, FTX US President Brett Harrison said that any direct deposits from employers to FTX US would be stored in FDIC-insured bank accounts.
In a letter directed to Harrison and FTX US Chief Regulatory Officer Dan Friedberg, FDIC Assistant General Counsel Seth Rosebrock wrote that Harrison's tweet may "contain false and misleading" statements. SmartAsset and CryptoSEC also said that FTX was "FDIC-insured," he wrote.
These statements appear to contain false and misleading representations that uninsured products are insured by the FDIC, as well as false and misleading statements about the extent and manner of protection provided by FDIC deposit insurance and misuse the FDIC's name," he wrote. "These false and misleading statements represent or imply that FTX US is FDIC-insured, that funds deposited with FTX US are placed, and all times remain, in accounts at unnamed FDIC-insured banks, that brokerage accounts at FTX US are FDIC-insured, and that FDIC insurance is available for cryptocurrency or stocks."
FTX US is not insured by the FDIC, and the regulator does not insure brokerage accounts or cover stocks and cryptocurrencies, he continued
In response, Harrison tweeted that per the FDIC’s instruction "I deleted the tweet. The tweet was written in response to questions raised on Twitter regarding whether direct USD deposits from employers were held at insured banks (i.e., Evolve Bank)."
In addition, Sam Bankman-Fried, CEO of FTX, the parent company of FTX US, tweeted: “FTX does not have FDIC insurance … banks we work with do. We never meant otherwise, and apologize if anyone misinterpreted it.”
The four other letter recipients claimed that crypto exchanges like Coinbase (COIN), Gemini and eToro were FDIC-insured, and the letters directed at these platforms order them to clarify that this is not, in fact, accurate.
4. Canadian Bank Regulator Details Crypto Liquidity, Backing Rules
Canada joins U.S. and European authorities in explaining how its supervised entities can engage with crypto.
Canada's Office of the Superintendent of Financial Institutions (OSFI), the nation's primary bank and insurance company regulator, directed entities under its supervision to limit how much exposure they have to cryptocurrencies under interim guidance published Thursday.
According to the guidance, OSFI categorizes cryptos as either Group 1 or Group 2 assets. Group 1 represents traditional assets that confer rights and obligations. Anything else is a Group 2 asset. Regulated entities need to notify OSFI if their total gross positions exceed 1% of their capital and if their total net short positions exceed 0.1% of their capital.
The scope of this advisory is limited to the capital and liquidity treatment of a FRFI’s exposures to crypto assets. The advisory does not address other issues, including whether a FRFI is permitted under the Bank Act, Insurance Companies Act or Trust and Loan Companies Act to issue any particular crypto asset, or to acquire or hold a controlling or substantial investment in entities that engage in this activity," the guidance said. "This advisory sets out OSFI’s expectations as to when FRFIs should notify their lead supervisor if they intend to have exposures to cryptoassets."
If an entity does want to conduct other crypto-related activities, it needs to contact its supervisor at OSFI and share information as needed, the regulator said.
Thursday's publication marks the first major federal crypto rules for banks issued by a Canadian regulator. It comes the same week the U.S. Federal Reserve and the European Central Bank published similar guidance for regulated entities under their respective purviews.
5. Bankrupt Lender Celsius CEO Owes Creditors Transparency, Crypto Lawyer Says
If Alex Mashinsky was “being transparent,” there would be “no need to pull in an independent examiner," said Sasha Hodder, founder of Hodder Law Firm, on CoinDesk TV's "First Mover."
The U.S. Trustee overseeing the Celsius Network bankruptcy is right to seek an independent examiner because the crypto lender’s CEO hasn’t been forthright with information.
Sasha Hodder, founder of Hodder Law Firm, told CoinDesk TV Friday there needs to be more “transparency” from Celsius CEO Alex Mashinsky, including a list of what creditors are owed money. Hodder's firm, which works with bitcoin and crypto entrepreneurs, is not involved in the bankruptcy proceeding.
If [Mashinsky] was being transparent, [the Trustee] would not have a need to pull in an independent examiner,” Hodder said on CoinDesk TV’s “First Mover.”
Creditors “are upset that [Celsius is] burning through the money very quickly,” Hodder said. The lender has been in bankruptcy proceedings since filing for Chapter 11 bankruptcy protection in July. On Thursday, the U.S. Trustee’s office filed with the Bankruptcy Court of the Southern District of New York seeking the appointment of an independent examiner.
Celsius said on Monday it was going to run out of money by the end of October. However, on Friday, during a hearing call with creditors, Chief Financial Officer Chris Ferraro now says Celsius has or will have enough money to fund operations at least through the end of the year. Ferraro said the company could fund operations via maturing loans and savings from its sales and taxes on its newly established Texas-based mining rigs. Mashinsky, who was also on the call, did not answer any questions.
No one has been able to get any straight information out of Celsius CEO Alex Mashinsky about how much they actually owe certain creditors,” Hodder said.
In June, the crypto lender froze customer withdrawals in a bid to avoid a run on its deposits. By the end of the month, it turned to experts to help salvage and preserve its assets.
If the U.S. Trustee, which is responsible for overseeing bankruptcy matters including fraud, receives approval to assign an independent examiner, it may be likely that a list of what creditors are owed will finally be available, according to Hodder.
“We need more transparency,” she said. “[Of] the top 50 debtors, only 10 of them are known.”
Some may argue the warning signs were around even before the lender filed for bankruptcy, she said. Back in April, when the “market started to implode” and the company asked its clients to increase their bitcoin (BTC) holdings in the event it would have to use it as collateral, Hodder said, “it was disheartening for everyday investors.”
6. Thai SEC Cautions Investors About Risks of DeFi Transactions
The Securities and Exchange Commission of Thailand (Thai SEC) has asked crypto investors in the country to be careful with DeFi transactions, terming them risky.
The watchdog argued that local regulators have no control over the up-and-coming industry.
*Popular but Not Full-Proof*
In a statement on Wednesday, the financial and capital markets watchdog said DeFi services have become popular, especially deposit taking and lending services. But these services are risky as the mechanism to control operations that enforce terms in smart contracts may be absent in DeFi platforms.
Further enumerating the risks, the watchdog noted that overleveraged collateral and lackaccurateoper information about terms, conditions, and functionalitcould can leave the investors exposed to exploitation. DeFi platforms lure investors into transactions showing high returns, but there are hidden risks, including the possibility of the rug-pull, it added.
Thai SEC’s warning comes in the wake of crypto exchange Zipmex halting withdrawals for its local customers on July 21. Zipmex’s decision stemmed from liquidity problems arising out of its $53-million exposure to troubled lending platforms Babel Finance and Celsius Network.
7. Scam Alert: Cardano's (ADA) Charles Hoskinson Impersonated by Malefactors.
Joshua Miller has shared a screenshot of a conversation that took place between a crypto enthusiast and a scammer that pretends to be Charles Hoskinson. Scammers impersonate Charles Hoskinson in social networks Input Output Global's (IOG) NFT business lead Joshua Miller has taken to Twitter to warn the global crypto community about a novel scam campaign gaining steam.
Joshua Miller | IOHK | NFT | Cardano | ZEA Merch
@IOHK_Josh
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No @IOHK_Charles isn't gonna message you on FB. He doesn't have an IG either. Don't get swept up by a scammer!
On the screenshot, there is a conversation between two Instagram users; one of them describes himself as IOG CEO Charles Hoskinson. Allegedly, Charles Hoskinson thanks his correspondent for support and in a very strange manner asks whether his voice was inspirational. However, the scammer makes a critical mistake: he describes his role as "Owner and CEO of Cardano Foundation." Actually, Charles Hoskinson is the CEO and founder of Input Output Global, a development studio behind the Cardano (ADA) solutions.
Read more on U.Today https://u.today/scam-alert-cardanos-ada-charles-hoskinson-impersonated-by-malefactors
