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Swiss Regulator Urges Financial Watchdogs To Protect Crypto Investors

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Swiss Regulator Urges Financial Watchdogs To Protect Crypto Investors

Crypto trading is increasingly similar to the U.S. stock market of the late 1920s, the head of the Swiss financial watchdog has remarked. The high-ranking official believes that regulatory agencies around the world should do more to ensure investor protection.

Swiss Financial Watchdog Executive Calls for More Regulations for ‘Abusive’ Crypto Market

Governments are still trying to find the best approach to overseeing the $900-billion crypto asset market, which in many jurisdictions is only partially regulated, Euronews noted in a report on Wednesday. Officials have issued numerous warnings about the risks associated with cryptocurrency investments, including “manipulation of opaque crypto markets.”

Much more can be done in that regard, according to a statement by Urban Angehrn, CEO of Switzerland’s Financial Market Supervisory Authority (Finma). Speaking during a conference in the Swiss city of Zurich, Angehrn further commented:

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It would seem to me that a lot of trading in digital assets looks like the U.S. stock market in 1928, where all kinds of abuse, pump and dump, are now in fact frequently common.

The top Finma executive also urged his colleagues to “think about the potential of technology to make it easy to deal with the large amounts of data and to protect consumers from trading on abusive markets.” His call comes amid market turmoil and problems with some crypto projects in the past several weeks.

The overall capitalization of the crypto market fell to $900 billion, from around $3 trillion in November, 2021. Bitcoin (BTC), the cryptocurrency with the largest market cap, dropped below $20,000 per coin earlier this month, for the first time since December 2020.

This year’s losses in its value reached approximately 60%, but high inflation and rising interest rates have prompted a flight of capital from other higher-risk assets and stocks as well, the report points out. On this backdrop, and given the troubles at companies like Celsius, regulatory pressure on the industry is likely to increase.

Do you expect regulators to adopt stricter rules for the crypto sector in the near future? Share your thoughts on the subject in the comments section below.

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Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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Image Credits: Shutterstock, Pixabay, Wiki Commons, Shutterstock / T. Schneider

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

3AC

FTX CEO Sam Bankman-Fried Warns More Crypto Company Insolvencies Are Coming

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FTX CEO Sam Bankman-Fried Warns More Crypto Company Insolvencies Are Coming

In a recent interview, Sam Bankman-Fried, the founder of the popular exchange FTX, warned that some crypto exchanges are “secretly insolvent” and may soon fail. Bankman-Fried’s FTX and Alameda Research have already helped Blockfi and Voyager Digital as the 30-year-old billionaire says sometimes you have to do “what it takes to sort of stabilize things and protect customers.”

Bankman-Fried’s FTX and Alameda Research Provide Credit Lines to Specific Crypto Firms

The crypto economy has been hit hard by the current bear market and Terra LUNA and UST fallout that took place last month. Terra’s downfall arguably started a significant domino effect that saw numerous exposed firms suffer sizable losses.

Many of the issues hurting the crypto community stem from massive leverage and most of the contagion effect is tethered to lenders and borrowers. Over two weeks ago, the crypto lender Celsius paused withdrawals, and ‘people familiar with the matter’ have said Celsius is dealing with notable financial hardships.

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Three Arrows Capital (3AC), a crypto hedge fund based out of Singapore, allegedly fell victim to crucial liquidations and purchased $200 million of locked luna classic (LUNC) that’s now worth $700. The issues that derived from Terra, Celsius, and 3AC have seemingly trickled exposure down to other crypto firms as well.

Bankman-Fried’s quantitative cryptocurrency trading firm, Alameda Research, helped Voyager Digital cope with 3AC exposure by providing the firm with a $500 million line of credit. His crypto exchange FTX gave the crypto lender Blockfi a $250 million line of credit on June 21.

Bankman-Fried: ‘Some Companies Are Too Far Gone’ or ‘There’s Not Much of a Business Left to Be Saved’

Furthermore, Bankman-Fried spoke about 3AC on June 19, and explained on Twitter that 3AC’s financial hardships “couldn’t have happened with an onchain protocol that was transparent.” On June 28, 2022, Forbes author Steven Ehrlich did an interview with Bankman-Fried, and the FTX CEO was very candid about crypto exchanges that are “secretly insolvent.”

Bankman-Fried also spoke about the recent investments in Blockfi and Voyager, as the FTX CEO explained there’s a chance he may not get a return on his investment. “You know, we’re willing to do a somewhat bad deal here, if that’s what it takes to sort of stabilize things and protect customers,” Bankman-Fried told the Forbes contributor. The FTX CEO said that more platforms will bow out from financial burdens in the near future.

“There are some third-tier exchanges that are already secretly insolvent,” Bankman-Fried detailed. “There are companies that are basically too far gone and it’s not practical to backstop them for reasons like a substantial hole in the balance sheet, regulatory issues, or that there is not much of a business left to be saved,” he added.

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On May 27, 2022, Bankman Fried said that FTX was prepared to deploy billions on mergers and acquisitions. Bankman-Fried told Forbes that FTX is financially sound and has been profitable for 10 quarters.

He told Ehrlich that FTX was eyeing over-leveraged crypto miners. Bitcoin.com News has also recently reported that estimates say there’s currently $4 billion in distressed loans backed by crypto mining rigs. Bankman-Fried talked to Ehrlich about the largest stablecoin by market valuation, tether (USDT), as well. According to Ehrlich’s interview with Bankman-Fried, the FTX CEO is not concerned about tether.

“I think that the really bearish views on Tether are wrong… I don’t think there is any evidence to support them,” Bankman-Fried told the reporter.

What do you think about Bankman-Fried’s recent interview regarding the distressed crypto companies? Let us know what you think about this subject in the comments section below.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,700 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Akin Gump

Celsius Stories Littered With ‘People Familiar With The Matter’ Sources, Report Claims Lender Struggles With Arguments Over Bankruptcy

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Celsius Stories Littered With ‘People Familiar With The Matter’ Sources, Report Claims Lender Struggles With Arguments Over Bankruptcy

The embattled crypto lending platform Celsius has kept withdrawals and transfers frozen since June 12 and told the Celsius Network community that the “process will take time.” Since then, Celsius users are wondering why they are still receiving weekly rewards, and reportedly the company’s management has been arguing with its lawyers over whether or not the business should file for Chapter 11 bankruptcy. However, most of the Celsius articles these days are quoting ‘people familiar with the matter,’ and ultimately these sources cannot be verified.

Celsius Customer Says It Is ‘Insulting’ That the Lending Company is Still Paying Weekly Rewards

16 days ago, the crypto lending platform Celsius told customers that it was pausing swaps, transfers, and withdrawals and did not refer to a time when the company would reinstate the services. Since then, it has been assumed that Celsius is suffering from a financial hardship and possible insolvency.

Last week it was reported by the Wall Street Journal (WSJ) that the company was seeking restructuring advice from the advisory firm Alvarez & Marsal. Another report that followed claimed that Goldman Sachs was allegedly looking to buy distressed assets from the firm “at potentially big discounts in the event of a bankruptcy filing.”

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Furthermore, on June 27, Bnktothefuture CEO Simon Dixon wrote about still getting his weekly rewards from the company, despite the frozen withdrawals. “Email on one of my accounts,” Dixon wrote. “Can’t withdraw but Celsius Network [is] still paying out. I’m curious if you think the rewards should still be coming? Thoughts?” Dixon added.

Some members of the crypto community called the dispersal of weekly rewards offensive. “This is honestly insulting, Celsius Network is still paying weekly rewards while holding my crypto hostage,” an individual tweeted on Monday.

Meanwhile, some users asked if there were any onchain activities stemming from the Celsius Network or whether or not capital has been moved. “Is anyone still keeping up with Celsius Network’s onchain activities of their funds? If they still paying down their loan/moving capital etc…,” one person wrote on Twitter.

Another person mentioned it was likely a legal chess move by Celsius’s management. “They’re likely still “paying” rewards because if they stop, they violate their terms of service (contract) and then have no lawful reason to hold your funds in earn any longer,” the individual tweeted on Monday.

Sources Say Celsius Is Arguing With Lawyers About Filing for Chapter 11 Bankruptcy — Most Celsius Articles Over the Last Week Quote ‘People With Knowledge of the Situation’

On the same day, a report from the theblock.co’s reporter Andrew Rummer says that Celsius’s lawyers want the company to file for Chapter 11 bankruptcy. Rummer’s report notes that the company has been against the proposition to file Chapter 11, which is one of the most expensive routes of bankruptcy available.

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The reporter’s source stems from “people with knowledge of the situation,” and this has been an ongoing trend as far as Celsius news is concerned. Many reports from publications like theblock.co, WSJ, Bloomberg, and others covering the Celsius Network subject have quoted people familiar with the matter.

For instance, the WSJ claimed people familiar with the matter said that Celsius was working with the restructuring law firm Akin Gump Strauss Hauer & Feld LLP. However, not too long after that report, the WSJ quoted individuals with knowledge of the situation again and noted that Celsius was seeking advice from the restructuring advisory firm Alvarez & Marsal.

It was the theblock.co that wrote about Celsius looking for help from the financial giant Citigroup when The Block author, Yogita Khatri, quoted two sources “familiar with the matter.” Moreover, it was the crypto publication Coindesk that reported on Goldman Sachs looking to buy distressed assets from Celsius. That information derived from “two people familiar with the matter,” according to Coindesk author Tracy Wang.

The Block’s Rummer said his sources claim that Celsius has been “prevented from making any public pronouncements due to legal advice.” The sources claimed that Celsius Network users would prefer an alternative to bankruptcy proceedings.

“To that end, users can show their support by engaging ‘HODL Mode‘ in their Celsius account, said the people,” Rummer wrote on Monday. With all the anonymous sources, people with knowledge of the situation, and those familiar with the matter, it is hard to find accurate information on what Celsius is actually doing to fix its issues.

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People are likely inclined to wait for Celsius’s official statements as most everything else has been hearsay and speculation. Yet there is no certainty on when Celsius will respond to the issues customers are facing and until then, they have to rely on so-called individuals with knowledge of the situation.

What do you think about the latest reports about Celsius? Do you think people ‘familiar with the matter’ sources are legitimate? Let us know what you think about the Celsius subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Bitcoin Miners

Report: $4B In Bitcoin Mining Loans Are In Distress — JPMorgan Analyst Says Price Pressure Stems From Miner Sales

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Report: $4B In Bitcoin Mining Loans Are In Distress — JPMorgan Analyst Says Price Pressure Stems From Miner Sales

Cryptocurrency-related lending has become a black smudge for the industry these days and according to a recent report, bitcoin’s low price has put billions in mining loans under stress. The report, which quotes the co-founder of mining company Luxor Technologies, Ethan Vera, says that roughly $4 billion in loans backed by crypto mining rigs are extremely close to running a risk of default.

Analyst Says Miners ‘Are Nervous About Their Loan Books’

The price of bitcoin (BTC) is 21% lower than it was two weeks ago and the price drop has hurt BTC miners a great deal. According to a report from Bloomberg, analysts say that a number of loans backed by mining machines are underwater.

Luxor’s Ethan Vera estimates that around $4 billion in loans backed by mining rigs are under stress. “They are nervous about their loan books, especially those with high collateral ratios,” Vera explained to Bloomberg’s David Pan.

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Using current BTC exchange rates, only 14 SHA256-based mining rigs are profiting with an electrical cost of around $0.05 per kilowatt-hour (kWh), according to asicminervalue.com statistics. The top mining machines manufactured by Bitmain and Microbt, gather between $2 to around $4.50 per day with an electrical cost of around $0.05 per kWh.

The report notes that miners are selling BTC to bolster operational costs and it highlighted that in May, Core Scientific Inc. sold over 2,000 BTC for operational expenses.

“Bitcoin miners, broadly speaking, are feeling pain,” Luka Jankovic, head of lending at Galaxy Digital detailed in the report. “A lot of operations have become net IRR negative at these levels. Machine values have plummeted and are still in price discovery mode, which is compounded by volatile energy prices and limited supply for rack space,” Jankovic added.

JPMorgan Analyst Says Bitcoin Miners Continue to Put Pressure on the Price

Traditionally, during bear markets, bitcoin miners are forced to sell off holdings which puts even more pressure on the price. Another report, quoting JPMorgan analyst Nikolaos Panigirtzoglou explained that bitcoin miners that need to sell will keep weight on the current downward pressure affecting BTC markets in recent times.

Panigirtzoglou and his group of strategists at JPMorgan believe that privately-held miners may have sold a large share of block subsidies to help operational costs. A number of reports had shown that miners have been selling large quantities of BTC since February 2022.

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“Bitcoin miners have been net distributors since the recent sell-off,” the team of onchain analysts at Glassnode detailed on June 2. “Miners balances have recently declined at a peak rate of 5k to 8k BTC per month ($150M to $240M at $30k BTC).”

During the past few weeks, a handful of crypto lenders have also been under severe stress and some are dealing with liquidations. The crypto lender Celsius has been under the crypto community’s scrutiny for alleged liquidations and rumors about restructuring and insolvency.

Loans tied to the BTC mining industry may force miners to sell even more BTC if prices go lower than today’s current exchange rates.

What do you think about the pressure bitcoin miners are feeling from the lower bitcoin price? Let us know what you think about this subject in the comments section below.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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