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Ripple Executives And XRP Legal Team Criticise SEC’s Crypto Regulations

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In a bold condemnation of the U.S. Securities and Exchange Commission (SEC), Chris Larsen, the Executive Chairman of Ripple, and legal representatives for XRP have taken a strong stance against the regulatory body’s aggressive approach to overseeing the cryptocurrency sphere. Federal judges have openly questioned the SEC’s strategies, branding them as “arbitrary and capricious” during recent legal skirmishes.

Chris Larsen, the prominent figurehead of Ripple, boldly opposed the SEC’s strategy of enforcing regulation through punitive actions today. He highlighted the shifting tide favoring the cryptocurrency industry, with courts growing reluctant to endorse the SEC’s corrective measures. In a heartfelt appeal to the U.S. Congress, Larsen implored them to step in and end what he characterized as senseless lawsuits instigated by the SEC.

In the crypto sphere, XRP lawyer Bill Morgan joined the chorus, condemning the SEC’s persistent appeals despite a series of courtroom defeats. Morgan criticized the SEC’s approach, while judges in the Grayscale lawsuit called their claims erratic, and Judge Netburn, overseeing the Ripple case, deemed their positions hypocritical.

Ripple’s Confidence Amid SEC Regulatory Uncertainty

Despite the ongoing legal disputes, Ripple’s leadership remains optimistic about its chances against the SEC. Their argument centers around the SEC’s lack of clarity on the reasons for their lawsuits and their failure to specify whether the existing regulatory framework is adequate for supervising the cryptocurrency industry.

In an interview on Bloomberg on September 6, Chris Larsen didn’t hold back in assigning blame to the U.S. government and the SEC for their perceived hostile stance. He argued that their policies were hindering San Francisco’s aspirations to become the “blockchain capital of the world.”

Amid Regulatory Headwinds, XRP Sees Minor Downturn Today. XRP dipped by 0.42% over the past 24 hours, trading at $0.4988. Its daily range saw a low of $0.493 and a high of $0.503. As the crypto space faces heightened regulatory scrutiny, the ongoing Ripple-SEC clash remains a focal point, casting uncertainty over XRP and broader crypto regulatory matters

Related Reading:| Ripple’s Bold XRP Moves Amidst Market Flux Raise Questions

XRP ETF Hurdles, Analyst Reveals Key Conditions For Approval

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James Seyffart, a seasoned ETF analyst from Bloomberg, illuminated the innovative potential of the looming advent of an XRP exchange-traded fund (ETF) during a fresh installment of Tony Edward’s forward-thinking Thinking Crypto Podcast. However, Seyffart’s revelations demand navigation through an intricate web of prerequisites before the broader crypto community can witness an XRP ETF’s actualization.

Seyffart’s analysis hinges on pivotal conditions that form the bedrock of an XRP ETF’s feasibility. At the forefront stands the necessity for the Chicago Mercantile Exchange (CME), a heavyweight in derivatives trading, to list Ripple futures. According to Seyffart, this strategic move would pave the way for ETF approval, as Ripple futures contracts on CME would streamline the regulatory green light for an XRP futures ETF.

Central to Seyffart’s argument is the prerequisite of an underlying asset. He underscores that an ETF demands a robust asset to anchor its value, and in this case, Ripple’s potential presence on the derivative exchange would bridge this requirement. Seyffart dispels hopes of a Ripple spot ETF gaining traction within the crypto community.

Seyffart’s Analysis Of SEC And XRP ETF

This revelation comes from Seyffart’s earlier observation that the Securities and Exchange Commission (SEC) remains restrained from endorsing a Ripple ETF. Seyffart anchors his stance on the present regulatory infrastructure’s inadequacy to accommodate the nuances of an ETF, a point further emphasized during the podcast.

Seyffart applies a broader lens to the issue, highlighting a persistent tussle that can only be resolved through legislative intervention. He asserts that the regulatory uncertainty will persist unless the US Congress enacts cryptocurrency-specific laws, causing an impasse.

The crux of Seyffart’s proposition lies in regulatory clarity. He contends that well-defined laws about cryptocurrencies would streamline listing Ripple futures on exchanges like CME, paving a more straightforward path toward ultimate SEC ETF approval.

In an intriguing twist, Seyffart brings an unexpected perspective – the demand for an XRP ETF remains minimal. With market interest largely absent, Seyffart notes that ETF issuers lack the impetus to initiate moves toward an XRP ETF.

In essence, Seyffart’s insights provide a comprehensive panorama of the multifaceted aspects that govern the prospects of an XRP ETF. Regulatory amendments, market demand, and strategic steps must converge to transform this prospect from the drawing board to the trading floor.

Related Reading:| Ripple Wins Legal Battle Against a16z Over XRP Status

Former Celsius Network CEO Arrested Following Securities Fraud Accusations

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Bloomberg has reported the arrest of Alex Mashinsky, the former CEO of Celsius Network, on charges of securities fraud. The arrest follows closely on the heels of the U.S. Securities and Exchange Commission (SEC) filing a lawsuit against both Celsius Network and Mashinsky himself.

Celsius Network Faces Legal Troubles

The scrutiny surrounding Mashinsky and Celsius Network began when the company filed for bankruptcy in July 2022 after suffering significant losses of billions of dollars. In a related matter, Bloomberg reported that the Commodity Futures Trading Commission (CFTC) was also preparing to initiate legal action against Mashinsky.

The allegations against Mashinsky include the claim that he falsely represented Celsius as being in a robust financial position despite substantial losses resulting from risky crypto-lending investments. Mashinsky stepped down from his position as CEO in September 2022. The recent arrest and the SEC’s lawsuit represent the latest developments in a saga that has sent shockwaves through the cryptocurrency industry.

According to an anonymous source, the arrest occurred on Thursday morning, and the Securities and Exchange Commission also filed a lawsuit against Mashinsky and the company on the same day, as indicated by court records.

Celsius Network was among the high-profile crypto firms that experienced a collapse last year. The company gained popularity by offering high-interest rates on digital-asset deposits. However, following the collapse of the TerraUSD stablecoin and a downturn in the digital-asset markets, Celsius Network faced a substantial deficit in its balance sheet, leaving it unable to meet the surge in customer withdrawal requests.

Related Reading: | Celsius: Federal Lawsuit Looms Over Crypto Lender After CFTC Findings

Ethereum Gains Favor: Smart Money Prefers ETH Over Bitcoin, Bloomberg

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Ethereum (ETH) has witnessed substantial support from institutional investors who played a significant role in propelling the Bitcoin rally of 2021. Recognizing the potential use cases of cryptocurrencies in the future, institutional investors like JPMorgan, Ark Invest, MicroStrategy, Tesla, and Andreessen Horowitz, among others, embraced Bitcoin and other digital assets. Interestingly, these institutional investors are now displaying a greater preference for Ethereum over Bitcoin, indicating a shift in their investment focus.

Ethereum Gains Institutional Investor Preference

As the Ethereum Merge and Shanghai upgrade occurs, the narrative surrounding Ethereum surpassing Bitcoin gains further momentum. Traders anticipate comparatively smaller fluctuations in Ethereum compared to Bitcoin soon.

The volatility index of ETH over 30 days is currently lower than that of Bitcoin. Additionally, the historical volatility of Ether relative to Bitcoin over 180 days has experienced a significant decline since 2020, as reported by Bloomberg.

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 Source: Bloomberg

Due to the lower volatility observed, institutional investors are finding increased interest in investing in ETH rather than BTC. Lower volatility tends to allow institutional investors to allocate more capital toward cryptocurrencies. Furthermore, long-term investors are more inclined to expand their exposure to ETH.

The implied volatility indexes of Bitcoin and Ether are derived from options pricing. While both indexes experienced a decline from their recent peaks in March, the Ethereum index exhibited a more significant drop.

According to Richard Galvin, co-founder of Digital Asset Capital Management, implementing the Shanghai upgrade in April is expected to increase ETH staking yields, subsequently reducing volatility. However, the U.S. Securities and Exchange Commission (SEC) considers Ethereum a security. SEC Chair Gary Gensler believes that Ethereum’s transition to a proof-of-stake (PoS) consensus mechanism has transformed it into a security.

At the same time, the Bitcoin blockchain is influenced by Bitcoin ordinals, non-fungible tokens (NFTs), and meme coins. Additionally, the correlation between the prices of Bitcoin and Ethereum has reached its lowest point since 2021.

ETH and BTC Price Movement

ETH maintains its trading position above $1800, defying the influence of numerous macro factors, regulatory challenges, and the imminent US debt ceiling crisis that has significantly affected the global market. The price of ETH stands at $1818, exhibiting a 0.16% increase in the past 24 hours.

BTC faces the potential risk of dropping below the $25,000 mark. Within the last 24 hours, the price of BTC has experienced a 0.15% decline, with the lowest and highest points recorded at $26,549 and $26,986, respectively.

Related Reading: | Michael Saylor Highlights Bitcoin Ordinals’ Role in MicroStrategy’s App Development Vision |

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Source: Tradingview.com

FTX Ex-CEO’s Meetings With White House Aides Before Collapse

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Bloomberg reported on December 29th that before his company folded, Sam Bankman-Fried, the former CEO of FTX, met with senior White House officials at least four times to influence Washington’s crypto policy.

The most recent one was in September when SBF met with Mr. Steve Ricchetti, one of President Joe Biden’s key aides. This information was disclosed by White House officials aware of the situation. 

In earlier White House visitor log entries, FTX’s Former CEO had at least three other meetings. Officials have verified that they took place on April 22nd and May 12th, with Mr. Ricchetti and on May 13th, another senior Biden assistant, Mr. Bruce Reed.

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Source: White House 2022 visitor logs

According to Bloomberg’s report, officials said the final meeting was only one, despite the logs recording two consecutive sessions. 

Bankman-Fried’s brother Gabriel is recorded in a March meeting of his own and then took part in the May 13th session for a total of at least five this year that involved one or both of the brothers.

FTX Ties To Washington Comes Under Scrutiny

An official stated that Mr. Gabriel’s sessions at the White House were on broad discussions of the cryptocurrency market and exchanges as well as pandemic prevention to the charity he runs, Guarding Against Pandemics.

Bloomberg’s report claimed that “FTX’s ties to Washington have come under scrutiny since the exchange’s collapse.” The Democratic Party’s second-largest individual donor in the 2022 election cycle was SBF, which contributed millions to the party.

However, under the condition of anonymity, a source with knowledge of the meetings claimed that politics was not brought up at the White House meetings.

Formerly a fixture in Washington, FTX’s former CEO is currently being prosecuted for his part in the collapse of his crypto enterprise. He often traveled to Washington, D.C., while residing in the Bahamas, giving testimony to Congress and meeting with the SEC, CFTC, and White House representatives.

He frequently pushed for more regulation of the cryptocurrency industry and praised himself and his businesses as moral players. However, US prosecutors now present a radically different image, charging a variety of misdeeds:

including allegedly conspiring with others to use corporate money and shadow donors for political contributions and misusing billions of dollars of customers’ funds lent to FTX’s sister company, Alameda Research

Related Reading |  Charles Hoskinson Drops a Tweet on Recent Misinformation About Cardano

FTX Spent $84 Million To Acquire Blockfolio, Almost Entirely In FTT Tokens

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Financial records obtained by Bloomberg News show that the bankrupt crypto exchange FTX used a token it created to pay for the acquisition of the trading platform Blockfolio. 

Bloomberg reported that one of the biggest crypto purchases at the time, FTX spent over $84 million to acquire the bulk of Blockfolio in 2020. Of that amount, 94% was paid in FTX’s FTT tokens.

Although it was widely reported at the time that the exchange made the payment with a combination of cash, cryptocurrency, and equity, the financial specifics of FTX’s acquisition of Blockfolio were previously unknown.

However, unreported information provides insight into the former FTX CEO Sam Bankman- Fried’s “appetite for whimsical financial engineering” and an early desire to acquire clients through significant acquisitions.

According to the financial filings, the transaction valued Blockfolio at roughly $160 million and provided the exchange a 52% stock share with the option to purchase the remaining 48% within two years. 

FTT Plays Starring Role In FTX’s Demise

According to Bloomberg’s report, the FTT token was a major factor in the exchange’s downfall. After CoinDesk revealed that the exchange’s native token made up a sizeable chunk of Alameda’s balance sheet and competitor Binance CEO C.Z announced intentions to sell substantial amounts of it, the weeks-long controversy began.

However, Bloomberg’s news came under the spotlight after the U.S. SEC declared the exchange’s token, FTT, to be a security and that FTX used the funds raised from the FTT token sale to support its commercial activities.

The SEC stated in a lawsuit against Caroline Ellison, the former CEO of sibling trading company Alameda, and Gary Wang, a co-founder of FTX, that the huge token distribution to FTX encouraged the management team of the exchange to take actions to enhance user traffic to the trading platform, which in turn increased demand for and raised the trading price of the FTT token.

The lawsuit stated that In order to manipulate the price of FTT, Ellison followed SBF’s orders and directed Alameda to buy a significant amount of the commodity on the open market.

Ellison and Alameda were able to borrow more money because of this manipulative conduct, which also concealed Alameda’s genuine risk exposure. This manipulation served the Defendants’ strategy.

Related Reading |  Bitcoin’s Accumulation By Retail Investors Peaked By 17% In 2022

Blockstream Eyes Another Funding Round – This Time At A Lower Valuation “Below $1B”

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Blockstream, a crypto infrastructure company, has set up an investment round that will raise “fresh funds at a lower valuation” than its previous one, which is about below $1 billion, as reported by Bloomberg.

A source with knowledge of the situation who wanted to remain anonymous because they were talking about private information revealed the valuation amount. “One of the people said the figure may change.”

In terms of blockchain infrastructure, Blockstream is at the top of the world rankings. Liquid Network, a sidechain developed by it, allows financial institutions to tokenize assets while facilitating quicker Bitcoin payments. Additionally, the colocation of Bitcoin mining operations is made possible by Blockstream Mining’s enterprise-class mining facilities.

The 2014-founded business with headquarters in Montreal is engaged in a collaborative initiative with Jack Dorsey’s Block Inc. Reid Hoffman, a co-founder of LinkedIn has also backed Blockstreamm according to Bloomberg’s report.

However, the lower valuation funding move was prompted by the closure of the FTX Exchange, which made it difficult for digital asset firms to find investors willing to support them financially. However, when the company obtained $210 million from investors, including Baillie Gifford and iFinex, in August 2021, its worth was $3.2 billion; today, it is nearly 70% lower.

The investment was received at the same time that Blockstream hired the core team to develop its ASIC division and purchased Spondoolies’ intellectual property(a producer of Bitcoin mining equipment).

Blockstream CEO Says, The Fund Is For Hosting Crypto Miners

Adam Back, the CEO of Blockstream, declined to respond to Blomberg about the amount of the investment round or value but stated that it would be used to increase the capacity to host cryptocurrency miners.

As miners sought large-scale hosting, he noted that they quickly sold out of all of their capacity and had a massive backlog of both current and potential clients. 

The report asserts that many cryptocurrency miners have been hard hit by the drop in the value of Bitcoin and other tokens, as well as the rise in electricity prices, which has resulted in loan defaults and the confiscation of computing equipment.

The CEO of Blockstream said:

While Bitcoin price and mining profitability are down, hosting rates have risen over the last quarters, and our mining services are a rapidly expanding, high-margin enterprise business for us.

The crypto industry is struggling to recover from this year’s downturn and is beset by worries about future contagion following FTX’s collapse, making venture finance more difficult to come by.

Not just Blockstream was thinking about flat or lower fundraising rounds, but so were companies like Amber Group and Blockchain.com.The previous record-breaking rate of investment into blockchain firms has been replaced by far colder circumstances during the crypto winter.

Related Reading | Bitcoin And Ethereum ETFs Filed By Hong Kong’s Three AUMs

Crypto M&A Forecast For 2021 Strong Despite Dull Price Action

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The crypto market dropped to a $1.12 trillion market cap, at the time of writing. Despite this, 2021 has been a watershed moment year for the whole industry even as the staggering bull rally has come to a halt.

Many anticipated a bullish turn of events for Bitcoin and the altcoins during the weekend. However, the prices continued to remain in a consolidation mode and were far below the record-breaking numbers.

As the crypto industry shrugged off the craziness of the bull run, several companies have flourished this season. According to reports, M&A activity figures soared like never before as pandemic grappled the space in 2020.

M&A Activity in Crypto Industry To Soar Higher In 2021

Bloomberg revealed that the total value of mergers and acquisitions in the digital asset world more than doubled last year to $1.1 billion from 2019. The average deal size surged to $52.7 million from $19.2 million. With respect to demographics, it was Europe and Asia that saw a greater percentage of activity taking place.

Fundraising in the industry, on the other hand, saw a massive rise of 33% in overall value from 2019. It also said that while merger and acquisition activity in the industry was at its peak last year, the figure is headed to continue again this year and is likely to climb higher.

On a similar note, Henri Arslanian, PwC global cryptocurrency leader, was reportedly quoted saying,

“[2021].. is already on track to significantly surpass it from every single metric”

The impetus for a surge in activity is greater awareness of the asset class as well as blockchain technology. This can be attributed to the fact that the cryptocurrency market has expanded considerably in the first quarter of 2021 alone when compared to last year. Bitcoin surged ninefold in the last year all thanks to the mainstream embrace and interest from large investors and endorsements. All this and more has catapulted the asset class’s growth.

Bitcoin Fundamentals Making a Case for Resting Bull-Run: Bloomberg

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After amassing a decline of 14 percent in June, it’s been hard to predict a bitcoin bull’s run over the past few weeks. July began the second half of 2020 and early price movements indicated positive signs for the largest digital asset. On 6 July Bitcoin breached $9333 and at press time the asset was valued at $9,183.75.

Despite market uncertainty, a recent report by Bloomberg Intelligence suggested that Bitcoin might be sustaining a “resting bull run” behind the covers. Some of the main indicators discussed in the report were with respect to on-chain addresses, investor flows, and declining volatility.

Bitcoin volatility approaches a 3-year low index

According to Bloomberg Intelligence, Bitcoin has recently plummeted to its lowest level of volatility compared to crude oil, suggesting that BTC could slowly create organic demand for the asset while slowly attenuating to mainstream investment markets. The social-distancing enabled environment has played a part in bitcoin’s strength as investors have gradually seeking exposure to the best performing asset of the past decade.

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With Bitcoin gaining higher on risk basis vs stocks, the asset has currently attained an upper hand on NASDAQ based on historical volatility. The report stated,

“The crypto’s 260-day volatility measure is the lowest ever vs. the stock gauge. Our graphic depicts Bitcoin volatility is about 2x Nasdaq’s. It was closer to 7x when the crypto price and index first crossed paths in 2017. Bitcoin volatility typically increases when its price rises, and the relationship is normally inverse for equities.”

Bitcoin-Gold Ratio; History repeating itself?

With respect to Gold, Bitcoin’s decline in volatility is a direct indication that that digital asset is becoming less risky in the market. Currently hitting a new low in 2020, the above graph suggests that the last time BTC volatility remained at such low levels, the asset went on to register its largest bull run in history in 2017. Since then, the annual Bitcoin-risk metric has dropped below 70 percent from just above 100 percent.

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Now, a long-term drop in volatility across the past 3 years might suggest that BTC is currently poised for a trend reversal but Gold’s volatility is currently doing the opposite, with its annual risk measure reverting higher from a two-decade low in 2019.

With the price struggling to break long-term resistance at $10,000 since May, BTC will eventually break above the threshold at some point in time. However, it is imperative for the bull run to be based on strong fundamentals if the impending rally is aiming to embrace another all-time-high.

Here’s Why $20,000 Bitcoin is Still a Distant Dream in 2020

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The community is split right in the middle with Bitcoin at the moment. Over the past few weeks, the largest digital asset has failed multiple times to breach $10,000 and certain market analysts indicated that BTC might falter under falling buying pressure.

Regardless of that, Bloomberg’s long-term outlook for Bitcoin remained completely bullish. According to Bloomberg’s June 2020 edition of Bloomberg Galaxy Crypto Index (BGCI), the company expected that asset to re-test its all-time high valuation of $20,000.

That is a relatively big ask for Bitcoin considering the asset has yet to rally past its yearly high of $10,500. BTC also has immediate resistance at a yearly high of 2019 at $13,800, which should be its current long-term target.

However, Bloomberg’s Mike McGlone analyzed the market a little differently than the rest of the industry. McGlone suggested that due to the COVID-19, the maturation rate of Bitcoin has accelerated which has led to the ever-increasing appetite of the institutional investors. He believed that Grayscale’s intent and action in terms of accumulation of more than 25 percent of the BTC supply in 2020 stands true to that fact.

Is $20,000 attainable at the current rate though?

Without attempting to rain on Bloomberg’s parade, it is important to note that we currently reside in an ever-changing environment went it comes to the larger financial landscape.

To be fair, Bitcoin has a strong chance of breaching 2019’s yearly high of $13,800. A consistent position between $8500-$10000 over the last month are clearly indicators that a bottom at this range might be strong enough as well in the future.

Hence, considering its next bullish cycle starts during Q3 2020, with the possibility of the world economy becoming more stable, it will be hard to argue that strong bullish momentum would easily push the asset above the $13,000 mark.

However, as observed since 2019, Bitcoin does not pump like 2017 anymore. A sudden jump of thousands of dollars has been a rare occurrence, and even though the valuation jumped 178 percent from April 2019-June 2019, over the next 6 months, we saw the asset shaved 50 percent of its valuation.

Now, many people in the community criticized such retracements but it is actually a healthy sign when the price corrects itself after a huge plunge.

From an on-chain point of view, the utilization has dropped down significantly as well.

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The above chart indicates the number of unconfirmed transactions in the BTC mempool. As observed the total number of unconfirmed transactions has been going down since the halving ended. Although it appears positive on the surface, it also indicates that users were no longer using the chain as fervently as before the halving. Less congestion equals to less unconfirmed transactions.

Hence, it becomes incredibly difficult to sustain a bullish rally that will not be backed with fundamental metrics.

Therefore, at press time it won’t be a wise bet to pinned down all your hopes on Bitcoin to reach $20,000. At least not at the moment, when the market is still trying to find its bearing back.