<img src="https://crypto.news/app/uploads/2023/10/crypto-news-flag-of-Israel-front-side-view-blurry-virtaul-space-background-low-poly-style.jpg” />
This week, industry leaders assessed the impact of the war between Israel and Hamas; The trial of FTX founder Sam Bankman-Fried moved forward; and Ferrari confirmed plans to accept crypto payments.
Bankman-Fried’s political ambitions
On the fifth day of Sam Bankman-Fried’s trial, former Alameda CEO Caroline Ellison revealed that Bankman-Fried used client funds for political lobbying and engaged in substantial financial transactions, including significant contributions to political parties.
This includes a $10 billion donation to the Biden administration and a $35 million contribution to Republicans. Bankman-Fried also aspired to become president of the United States. His financial maneuvers included large loans, and Alameda accessed $14 billion of FTX client funds.
FTX and Alameda
On the sixth day, Ellison revealed that Alameda recklessly handled the loans. When lenders showed concern, they quickly canceled these loans. This triggered a scramble to pay off debts, with FTX customer deposits being the main source. As a result, approximately $10 billion in client funds were depleted.
Ellison revealed that Alameda presented seven different balance sheets, tailored to its specific audience. Additionally, Alameda used $100 million in cryptocurrency to bribe Chinese officials, with the goal of releasing $1 billion held in China.
On day seven, Ellison said he took on a multifaceted role at Alameda, spanning human resources, accounting and lender liaison. According to her, FTX suffered substantial losses, approximately $100 million, during the Terra collapse.
Efforts to secure funding from the Saudi royals were unsuccessful, shifting its attention to substantial investments and potentially competing with Modulo Capital. According to Ellison, FTX’s collapse was caused by a $10 million loan taken out by Alameda that the company was unable to repay.
FTX blamed for BlockFi collapse
Zac Prince, CEO of bankrupt lender BlockFi, testified on the eighth day of the trial. He attributed BlockFi’s challenges to FTX and Alameda. BlockFi had granted a hefty amount of $1.1 billion to Alameda, resulting in losses due to Terra’s implosion and 3AC’s default.
BlockFi had intended to line up with FTX for a potential acquisition in July, backed by a $400 million credit offering. However, BlockFi had extended an additional $850 million to Alameda from July to November of last year.
When FTT tokens crashed, BlockFi had to take the painful step of withdrawing loans. As a result, the company was caught in a financial crisis, and Prince implicitly placed responsibility on FTX and Alameda.
France, the G20 countries and California
The implosion of FTX indisputably exposed the need for clear regulations in the cryptocurrency market, and financial agencies around the world have continued to step up their efforts.
This week, the French regulatory agency, the Autorité de contrôle prudentiel et de résolution (ACPR), provided guidance on the regulatory framework for cryptocurrencies in the country following interviews and industry assessments.
A research paper from April ignited the discourse around DeFi regulation. It delved into the inherent risks associated with DeFi and explored potential avenues to incorporate it within the regulatory framework.
G20 financial leaders also unveiled a strategic plan to strengthen crypto regulations, with the goal of ensuring global financial stability. The plan draws on the expertise of the International Monetary Fund and the Financial Stability Board, focusing on improving anti-money laundering efforts within the crypto scene.
Additionally, California Governor Gavin Newsom signed a bill to regulate cryptocurrencies. Under the legislation, crypto companies operating in the state will be required to obtain licenses. The law establishes a strong regulatory framework for encryption companies and enhances data privacy safeguards for California residents.
SEC Does Not Appeal Grayscale ETF Verdict
The US SEC also made headlines this week, with reports related to the agency rekindling hopes for a bitcoin spot ETF. The SEC had until this week to appeal an earlier verdict by a US panel that called on the regulatory agency to re-evaluate Grayscale’s application for a spot btc ETF.
The agency did not appeal the court decision within the deadline. As a result, the SEC will have to review the previous rejection of Grayscale’s application. As reported, the nft market unexpectedly recorded a rally following this development.
Potential impact of the Israeli-Palestinian conflict
This week saw an escalation of tension between Israel and Palestine, drawing the attention of market analysts, who anticipate a potentially turbulent course for the cryptocurrency industry amid the conflict. A Bitfinex Alpha report claimed increased volatility in bitcoin (btc) due to the conflict.
Periods of geopolitical turmoil often result in jittery financial markets, where cryptoassets are perceived as riskier assets that investors may abandon. However, according to prominent analyst Mike Deutscher, markets typically recover after such events. Similar sentiments were also echoed by analyst ElliotoTrades.
The market effects were felt when bitcoin broke through the psychological support of $27,000 on October 11. This was the first time btc traded below $27,000 in over a week. The asset recorded five consecutive daily losing candles, from October 8 to 12. A subsequent recovery was not enough to take it back above the $27,000 level.
The IMF also expressed concerns about global economic stability in light of the conflict, emphasizing the need for financial reforms, especially in crypto. The ongoing conflict poses economic risks to the Middle East.
The IMF stressed the importance of establishing internationally synchronized standards and regulations in areas such as crypto assets, data protection, cybersecurity and artificial intelligence.
Israel takes steps to close accounts linked to Hamas
Amid the conflict, Israel took steps to freeze crypto accounts associated with Hamas. This action followed Hamas’ attempts to raise funds in cryptocurrency. Israel hired cryptocurrency exchange Binance to track and close these accounts, while cooperating with UK authorities to freeze a Hamas-linked account at Barclays Bank.
Adoption: Ferrari, Mastercard and Bitstamp are in the news
This week, institutional adoption and interest continued to prevail. Luxury carmaker Ferrari heeded market demands and introduced cryptocurrency as a payment option, starting in the United States and expanding to Europe in the first quarter of 2024.
Enrico Galliera, Ferrari’s commercial and marketing director, clarified that a substantial part of its clientele is made up of cryptocurrency investors. Ferrari’s cryptocurrency payment option includes bitcoin and ethereum, with Bitpay as its initial partner in the United States.
This week, Mastercard introduced a novel solution to improve the interoperability of CBDCs across various blockchains.
The solution was collaboratively developed as part of a pilot initiative led by the Reserve Bank of Australia to explore CBDC applications in Australia. It allows CBDC tokenization on different blockchains, including ethereum, while maintaining central bank oversight.
Reports on October 9 indicated that Bitstamp is in talks with three leading European banks to help them offer crypto services. The discussions arise from the optimistic outlook associated with the upcoming MiCA regulations, which seek to incorporate cryptocurrencies into traditional financial frameworks.
