11 November

The consumer price index (CPI) rose 0.4% in October, far slower than expectations for 0.6%, the U.S. Labor Department reported on Thursday. The annual pace slowed to just 7.7% versus estimates for 8%, and down from 8.2% in September. Core CPI – which strips out food and energy – rose 0.3% in October, slower than expectations for 0.5% and falling from September’s 0.6%. On an annualized basis, core CPI was up 6.3% in October slower than expectations for a 6.5% rise and falling from 6.6% in September.

Bitcoin (BTC) – which plunged to a new two-year low of $15,554 on Wednesday thanks to the FTX blowup – gained a quick $1,500, or about 10%, in the minutes after the report. At press time it is trading at $17,750.

While bitcoin is having only a modest rally, equity futures are soaring on thoughts the inflation slowdown might mean the Fed’s tightening cycle could be over sooner than previously feared. Nasdaq futures are higher by just shy of 4% and S&P 500 futures are ahead 3%. Bond markets are in rally mode as well, with the 10-year Treasury yield down a big 21 basis points to 3.93%.”

“Sam Bankman-Fried has had discussions with several investors including Tron founder Justin Sun, rival crypto exchange OKX and a number of investment funds as he looks to raise $9.4 billion for FTX. Per the report, SBF is looking to raise about $1 billion from Sun, another $1 billion from OKX and $2 billion from a group of investment funds.

Also on Thursday, FTX announced an agreement with Tron to establish a special facility to allow holders of TRX, BTT, JST, SUN and HT to swap assets on a 1:1 basis to external wallets.”

See Also: SBF Warns FTX Investors of Bankruptcy Without More Cash: Bloomberg
See Also: FTX May Be Looking to Kraken for Help—But Jesse Powell Says There Are ‘Red Flags’
See Also: Tron’s TRX Jumps 140% Amid 1:1 FTX Redemption of Tron-Based Tokens
See Also: FTX Token FTT Heads Toward Zero After Liquidity Crisis, Botched Binance Deal

“The Wall Street Journal reported Thursday that FTX had placed billions of dollars worth of customer funds on risky bets, with some suspecting customer funds were used to help bolster Alameda.

Using customers’ investments to support Alameda Research is a serious problem and could amount to claims for fraudulent breach of trust.

FTX was literally stealing customer funds.

The exchange’s terms of service states that none of the crypto in customer accounts are ‘the property of, or shall or may be loaned to, FTX Trading,’ and that the platform ‘does not represent or treat Digital Assets in User’s Accounts as belonging to FTX Trading.’ In other words, FTX cannot use the funds for purposes other than just holding them on customers’ behalf.

The distinction made in the terms of service will be particularly important if the company ends up facing insolvency, Nyman said. With Binance backing out of a buyout and Alameda winding down services, FTX could file for bankruptcy in Antigua and Barbuda, where it was incorporated.

Because the terms of service specify that customer funds do not belong to FTX, those funds cannot be used to pay back creditors or other stakeholders in the event of insolvency. Beyond any civil actions taken by FTX users who cannot access their funds, misappropriation of customer funds could lead to criminal charges. The U.S. Department of Justice is already investigating FTX.”

See Also: FTX Used Customer Funds Among Other Assets to Prop Up Alameda Research in May: Reuters
See Also: Crypto Platforms Use ‘Toxic Combination’ of Trading User Funds Without Disclosure: SEC Chair Gary Gensler
See Also: Most of FTX’s Legal and Compliance Team Quit: Report

The U.S. Department of Justice is looking into crypto exchange FTX after its apparent collapse, the Wall Street Journal reported Wednesday. The U.S. Securities and Exchange Commission and Commodity Futures Trading Commission are also investigating whether FTX had correctly handled its clients’ funds, Bloomberg reported earlier Wednesday.

Binance announced Tuesday it would acquire FTX, but said Wednesday that it would not, citing concerns about FTX’s books, which is an issue investigators may look into. The statement also cited news reports about “mishandled customer funds and alleged US agency investigations” as reasons for pulling out of the deal.

The issues are beyond our control or ability to help.”

See Also: FTX Assets Frozen by Bahamian Regulator
See Also: Tether Freezes $46M of USDT Held by FTX Following Law-Enforcement Request
See Also: US Justice Department, Regulators Contacted Binance on FTX Talks: Source

“White House Press Secretary Karine Jean-Pierre told reporters during a press briefing on Thursday that the Biden administration is ‘aware of the recent developments on [FTX] and will continue to monitor the situation.’

The administration has consistently maintained that, without proper oversight of cryptocurrencies, they risk harming everyday Americans. The most recent news further underscores these concerns and highlights why prudent regulation of cryptocurrencies is indeed needed.”

See Also: CFTC Commissioner Calls on Congress to Act After FTX Debacle
See Also: Crypto Conglomerates Require ‘Urgent Regulatory Attention,’ European Watchdogs Say
See Also: Crack Down on US Crypto Firms Over FTX Crisis ‘Makes No Sense’: Coinbase CEO
See Also: Republican lawmaker claims SEC chair was coordinating with FTX ‘to obtain regulatory monopoly’
See Also: With FTX Bloodied, Rival in US Regulatory Fight Adds Another Knife

Chainlink Labs offered its Proof of Reserve product as a solution to future trust issues in the crypto exchange market on Nov. 10. Chainlink argued that its product provides an “out-of-the-box” solution that exchanges can implement immediately.

The product uses Chainlink nodes connected to both the exchange’s API and its vault addresses, and the nodes are connected to a Proof of Reserve smart contract. The contract can be queried by any other account on the network to determine whether the exchange’s crypto assets are equal to its liabilities. Chainlink Labs sees this as a simple solution to the problem of trust in exchanges.

Proof of Reserve (PoR) is useful for for verifying centralized exchange asset reserves, off-chain bank account balances, cross-chain collateral, real-world asset reserves, and much more.”

See Also: Crypto Exchanges Scramble to Compile ‘Proof of Reserves’ as FTX Contagion Grips Markets
See Also: Binance shares wallet addresses and activity after proof-of-reserve pledge
See Also: OKX, Kucoin say proof of reserves will be ready in a month
See Also: Crypto.com commits to proof-of-reserves after halting certain deposits and withdrawals

“Venture capital giant Sequoia Capital reassured investors the firm remained largely unaffected by the unraveling of crypto exchange giant FTX and wider decline in digital asset markets even as it marked its investment down to zero.

In a note to limited partners, Sequoia says it invested just over $200 million in FTX via two funds. Sequoia said the exposure it has to FTX is limited, and whatever money it has lost has been offset by billions of dollars in gains.

The $150 million loss is offset by the approximately $7.5 billion in realized and unrealized gains in the same fund, so the fund remains in good shape.

We are in the business of taking risk. Some investments will surprise to the upside, and some will surprise to the downside. We do not take this responsibility lightly and do extensive research and thorough due diligence on every investment we make.

FTX’s investors include Softbank, Temasek Holdings, the Ontario Teachers’ Pension Plan, Race Capital, and Lightspeed Venture Partners, among others.”

See Also: Who Still Has Exposure to FTX?
See Also: Michael Novogratz Tells CNBC He Does Not Expect to Recover $77M Exposure Linked to FTX
See Also: Crypto Bank Silvergate’s Stock Defended By Analysts Amidst FTX Concerns

“FTX CEO Sam Bankman-Fried promised to use “every penny” his crypto exchange has to repay users ahead of investors, apologizing for his “f**k up” in a tweet thread Thursday.

The 30-year-old former billionaire took to Twitter to say Alameda Research – his empire’s once mighty crypto quant shop and market maker – would go dark “one way or another.” Of FTX, his upstart derivatives exchange that became the crypto industry’s darling, he said it will “embrace radical transparency” – if it continues operating at all.

See Also: Alameda, In Eye of Crypto Storm, Takes $37M of Wrapped Bitcoin Off FTX.US Exchange
See Also: Crypto Fund Alameda’s Ethereum Wallet Holdings Slumped 50% Since October
See Also: Alameda Research, FTX Ventures Websites Go Dark

“A record 31 million of the Solana blockhain’s SOL tokens were unstaked Thursday from the blockchain’s security mechanism, a day after crypto analysts warned that some investors might be seeking to redeem their holdings. But the price of SOL surged in digital-asset markets after the Solana Foundation, which supports development on the blockchain, said it would postpone a plan to unstake some 28.5 million tokens.

A total of 63 million SOL was previously ready to be unstaked at the conclusion of the Solana blockchain’s “epoch 370” staking lockup period. The foundation had tweeted late Wednesday that about 28.5 million SOL tokens scheduled to be unstaked had been re-staked due to a policy change of cloud service provider Hetzner on Nov. 2.”