Cryptocurrency

Regulators Launch Drastic Rescue Plan Post SVB’s Collapse, But Will It Be Enough?

Published

1 week ago

March 13, 2023

Regulators Launch Drastic Rescue Plan Post SVB’s Collapse, But Will It Be Enough?

Depositors of Silicon Valley Bank (SVB) can breathe a sigh of relief as the Federal Deposit Insurance Corporation (FDIC) confirmed the successful transfer of deposits to a new bridge bank. The transfer was approved by banking regulators on Sunday and was made to protect the financial system from contagion. The new bridge bank, called Silicon Valley Bank N.A., will be operated by the FDIC, and depositors have been automatically switched to this new entity.

FDIC’s Assurance

The FDIC confirmed the successful transfer of deposits to the new bridge bank and has assured depositors that they will have full access to their funds starting Monday morning. The new entity will operate under normal business hours and customers have been automatically switched to the new bank. The statement from the FDIC also ensures that depositors will not bear any losses associated with the resolution of Silicon Valley Bank, and taxpayers will not be affected.

Impact on Depositors

The successful transfer of deposits to the new bridge bank ensures that depositors will have full access to their funds, and there will be no loss of funds or interest. Depositors can continue to conduct their banking activities with the new entity as usual, and their account numbers, debit cards, and other banking services will remain the same. The FDIC has stated that there will be no interruption in services, and depositors can be assured that their funds are secure.

The financial world has been shaken by the news of Silicon Valley Bank’s collapse, marking the largest failure of a financial institution since the 2008 financial crisis. With memories of that tumultuous time still fresh in our minds, banking regulators have taken drastic measures to contain the fallout.

However, as officials emphasize that there will be no bailout for SVB, one can’t help but wonder: what will be the true cost of this failure?

Reports of SVB’s struggles sent shockwaves through the tech industry, triggering a run on the bank’s deposits. While potential buyers like PNC backed out, the government’s attempts to find a larger institution to take on the bank have been met with little success. As the rescue plans are put into action, it remains to be seen whether they will be enough to prevent the contagion from spreading to other financial institutions.

Arguably, the most unsettling aspect of this situation is the role of irrational fear in financial contagion. Will the measures taken by regulators be enough to calm the nerves of investors, or will the fear continue to spread, like a virus, taking down more banks in its wake?

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Cryptocurrency

Explosive Allegations: Hindenburg Research Accuses Jack Dorsey’s Block of Enabling Fraud Through Cash App’s Illicit Activities

Published

8 hours ago

March 23, 2023

Sohrab Khawas

Explosive Allegations: Hindenburg Research Accuses Jack Dorsey’s Block of Enabling Fraud Through Cash App’s Illicit Activities

Yet again Hindenburg Research’s new revelation has shocked the cryptocurrency market. According to a report published on Thursday by the investment research firm, Jack Dorsey’s digital payments startup Block has engaged in a massive fraud. After the Adani fiasco, it has now published a report alleging that Block Inc. has knowingly assisted fraud against customers and governments.

Block, formerly known as Square, is a ~$44 billion market cap company that claims to have developed a “frictionless” and “magical” financial technology with a mission to empower the “unbanked” and the “underbanked”. $SQ
(2/n) pic.twitter.com/NmL0f2MzgW

— Hindenburg Research (@HindenburgRes) March 23, 2023

Block was established in 2009 by Jim McKelvey and Dorsey. From November 2015, it has been traded as a public corporation on the New York Stock Exchange (NYSE) under the ticker code SQ.

Hindenburg, in its blog said, “Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping. The “magic” behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics.”

The share price of Block decreased 20% after the report’s release, reaching $57.85 in premarket trading. Market analysts predict a further loss of 40–50% over the next few days if Block is unable to make any convincing defenses against the allegations. It will be interesting to see how Block shares respond to this new report from Hindenburg, especially in light of how severely Adani shares were impacted following the Hindenburg report.

Allegations against Cash App

Hindenburg Research claims that Cash App, which was co-founded by Dorsey, rejected warnings from the Secret Service, the US Department of Labor, and many state agencies, as well as internal employee concerns.

The report asserted that the Cash app is often used for illegal purposes by citing the nonprofit Polaris Project. These allegations have been refuted by Cash App, which also said that it rejects any payments connected to illegal activity.

“There are dozens of ‘Elon Musk’ and ‘Donald Trump’ fake accounts as well. A search for Cash App account holders with the name “Jack Dorsey” turns up numerous accounts, including a number with “cash tags” that could be used to mislead and scam other users,” the report said.

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Crypto news

Coinbase Vs. SEC: Who Shall Prevail In The Battle For Crypto Clarity?

Published

10 hours ago

March 23, 2023

Elena R

Coinbase Vs. SEC: Who Shall Prevail In The Battle For Crypto Clarity?

Coinbase CEO Brian Armstrong’s recent comments comparing the Securities and Exchange Commission (SEC) to “soccer refs” in a game of pickleball have caused quite a stir in the crypto community. The remarks come after the SEC issued a Wells Notice to Coinbase, which usually precedes an enforcement action.

Imagine you’ve got both football and soccer refs on the field, but we’re actually playing pickleball (fastest growing new sport in America). The refs can’t really agree on the rules of this new game, and one of them decides to change a call they made back in April 2021.
— Brian Armstrong (@brian_armstrong) March 22, 2023

Lack of regulatory clarity to blame

Armstrong has been vocal about the lack of clarity from US regulators when it comes to crypto regulation. He has argued that the SEC has not been fair, reasonable, or even demonstrated a seriousness of purpose in its engagement with digital assets.

This sentiment is reflected in a recent tweet by Coinbase’s Chief Legal Officer, Paul Grewal, who claimed that the SEC provided “no clear rule book” on crypto regulations and that efforts to engage with the SEC are met with silence or enforcement actions

The truth is that today there is no clear rule book from the SEC on crypto, and efforts to engage with the SEC are met with silence or enforcement actions. They have not followed a good faith rulemaking process with industry, as required under the APA. 10/15
— paulgrewal.eth (@iampaulgrewal) March 22, 2023

Crypto community rallies behind Coinbase

The crypto community has widely condemned the SEC’s recent actions against Coinbase, with many agreeing that the regulator has reversed its earlier position regarding the exchange. There is a growing sense that the SEC is failing to provide the clarity and consistency that the industry needs to thrive. Many have thrown their support behind Coinbase, with some suggesting that the firm is fighting on behalf of the entire US crypto industry.

They argue that an unclear regulatory environment is driving activity offshore and that greater clarity is needed to ensure that the U.S. remains competitive in the rapidly growing crypto market.

Netizens Supports Coinbase

According to Jake Chervinsky, Chief Policy officer of the Blockchain Association, Coinbase has put in a lot of effort to obtain regulatory clarity from the SEC. However, the SEC has given Coinbase a Wells notice, which is disappointing but expected from an agency that primarily regulates through enforcement.

Fortunately, Coinbase is prepared to fight back and has a strong legal position. It’s important to remember that the SEC only makes allegations and doesn’t create laws. Ultimately, the courts will determine if the SEC’s allegations are accurate, and in this case, the SEC may be incorrect.

Coinbase has spent an extraordinary amount of time and resources working in good faith to seek regulatory clarity from the SEC.
The idea that they’d be rewarded with nothing but a Wells notice is sad, but not surprising from an agency best known for regulating by enforcement. https://t.co/BZ4a9AefEF

— Jake Chervinsky (@jchervinsky) March 22, 2023

Tony Edward, The host of Thinking Crypto Podcast, alleges that the regulator, Gary Gensler, is corrupt and had meetings with Sam Bankman-Fried and FTX officials multiple times, with the intention of creating a monopoly despite the ongoing fraud. He also claims that despite the SEC approving Coinbase’s public listing, they are now attacking the company.

Remember folks, corrupt regulator @GaryGensler had Sam Bankman-Fried and FTX officials in his office multiple times and was about to make them a monopoly despite the massive fraud that was happening.
The SEC green lighted Coinbase going public and is now attacking them.…

— Tony Edward (Thinking Crypto Podcast) (@ThinkingCrypto1) March 23, 2023
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Justin Sun was also charged with fraud and selling unregistered securities by SEC. However, in a recent tweet, he expressed confidence that the SEC’s legal complaint against his company lacks merit. He revealed that despite the legal hurdle, his company is still focused on building a decentralized financial system.

Furthermore, he acknowledges that the digital assets’ regulatory framework is still in its early stages and needs development. His company is willing to work with governments and regulatory bodies to establish clear guidelines for the crypto industry. Interestingly, Dominica recently adopted TRX and BTT as legal tender, indicating the growing significance of cryptocurrency.

The SEC’s civil complaint earlier today is just the latest example of actions it has taken against well known players in the blockchain and crypto space. We believe the complaint lacks merit, and in the meantime will continue building the most decentralized financial system.
— H.E. Justin Sun 孙宇晨 (@justinsuntron) March 23, 2023

With the SEC breathing down their necks, Coinbase is prepared to go all out in their legal battle. The crypto community has rallied behind them, with many pointing out the regulatory inconsistencies hurting the US crypto market.

Despite this lack of clarity, Coinbase remains determined to see the industry thrive and is open to collaborating with regulators to create clear guidelines. The stakes are high, but Coinbase is ready to take on the challenge and defend its position.

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Elena R

Elena is an expert in technical analysis and risk management in cryptocurrency market. She has 10+year experience in writing – accordingly she is avid journalists with a passion towards researching new insights coming into crypto erena.

Crypto news

Hindenburg Research Hints at Another ‘Big and Huge’ Report After the Adani Fiasco

Published

11 hours ago

March 23, 2023

Sohrab Khawas

Hindenburg Research Hints at Another ‘Big and Huge’ Report After the Adani Fiasco

The US-based short seller Hindenburg Research, which had previously published a report flagging the Adani group for manipulating the stock market and using unlawful offshore tax havens, announced on Thursday that it will shortly publish new research. The new report is expected to be “another huge one,” and the short-seller withheld any other information.

Taking to Twitter, they wrote, “New report soon—another big one.” As Hindenburg hinted in a new major report, banking stocks are already under pressure from the US financial crisis and the 25 basis point Fed rate hike.

New report soon—another big one.
— Hindenburg Research (@HindenburgRes) March 22, 2023

A few weeks ago, in a report dated January 24, the US short-seller accused the Adani group of “brazen stock manipulation and accounting fraud” and of employing several offshore shell firms to manipulate stock prices. The Gautam Adani-led group was the target of various other accusations in the report.

The company is said to have “substantial debt,” which involves pledging shares as collateral for loans, according to the report, and it added that the group’s auditor “hardly seems capable of complex audit work.”

The Adani group replied to the allegations in 413 pages and a part of their reply read, “ The document is a malicious combination of selective misinformation and concealed facts relating to baseless and discredited allegations to drive an ulterior motive. This is rife with conflict of interest and intended only to create a false market in securities to enable Hindenburg, an admitted short seller, to book massive financial gain through wrongful means at the cost of countless investors.”

This update comes at a time when the bank runs, regulators backlash and the fed’s interest hikes have gripped the economy. The crypto-focused bank, Silvergate Capital first announced insolvency, and then Silicon Valley Bank began scaring investors and account holders. However, then the regulators then took control and the rest is history.