Tag: crypto

FM Nirmala Sitharaman, US Treasury Secretary Janey Yellen Discuss Debt, Crypto at G20 Meet

Indian Finance Minister Nirmala Sitharaman and US Treasury Secretary Janet Yellen discussed strengthening multilateral development banks, global debt vulnerabilities and crypto assets on the sidelines of the G20 finance chiefs meeting on Thursday, the finance ministry said.

Yellen is expected to brief reporters later in the day and take part in a meeting of Group of Seven (G7) nations on the sidelines of the G20 meet.

India is hosting the first major G20 event under its year-long presidency at the summer retreat of Nandi Hills near tech hub Bengaluru.

“The two leaders discussed their perspectives on strengthening MDB (multilateral development banks), global debt vulnerabilities, crypto assets besides the Just Energy Transition Partnership,” New Delhi’s finance ministry said in a tweet.

Under the partnership, the United States and its allies, as well as multilateral development banks and agencies, provide funding to developing economies to move away from coal production and consumption.

India’s presidency of the bloc comes at a time when neighbouring South Asian countries Sri Lanka, Bangladesh and Pakistan have sought a bailout from the International Monetary Fund (IMF) over the past year due to an economic slowdown caused by the COVID-19 pandemic and the Ukraine war.

Reuters reported last week that India is drafting a proposal for G20 countries to help debtor nations by asking lenders, including China, the world’s largest sovereign creditor, to take a large haircut on loans.

During the event, the International Monetary Fund (IMF) plans to hold a virtual meeting with the World Bank, India, China, Saudi Arabia, the United States and other Group of Seven (G7) nations to try to reach understandings on common standards, principles and definitions on how to restructure distressed country debts.

India also supports a push by the IMF, the World Bank and the United States for the so-called Common Framework (CF) — a G20 initiative launched in 2020 to help poor countries delay debt repayments — to be expanded to include middle-income countries.

© Thomson Reuters 2023

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Amazon Could Launch NFT Initiative Linked to Its E-Commerce Website Around April: Report

Amazon could be gearing up to foray into the digital assets industry in 2023. The e-commerce giant is reportedly set to launch an NFT initiative this April that would be closely integrated with its mother platform. NFTs, or Non-Fungible Tokens, are digital collectibles, that are built on blockchains that transfer their complete ownerships to the buyers. Business experts from around the world have time and again predicted that NFTs, that are also compatible in the metaverse, could be the next advancement that global brands could take up to engage with the Web3 native customers.

Amazon’s plans to dabble in the Web3 space could have the platform encourage its customers to play games and earn NFTs as rewards, a Blockworks report said, citing people familiar with the matter.

For the longest time, Amazon has maintained a distance from the crypto sector owing to its volatile nature and legitimacy issues. In 2022 however, the adoption of NFTs grew in several parts of the world.

Several high-end and globally renowned brands linked their products to NFTs to rope in Web3 enthusiasts.

A total of $260 million (roughly Rs. 2,074 crore) has collectively been bagged by high-end luxury brands including Nike, Gucci, Dolce & Gabbana with the sales of their NFT pieces, a report by NFTgators said in August last year.

Amazon, being a seller of thousands of local and international brands, could now be seeing NFTs as a way to multiply its own revenue. If Amazon does enter the NFT arena, it could singlehandedly drive a mass engagement of people with digital assets.

“We knew it was possible. But now it seems like it’s really happening. That’s going to affect the existing players in the space — if they execute and do this right and are smart about it,” the Blockworks report quoted its anonymous sources as saying.

For now, Amazon’s official announcement around its NFT-related plans remain awaited.

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Binance Moved $346 Million for Seized Bitzlato Crypto Exchange, Blockchain Data Shows

Crypto giant Binance processed almost $346 million (roughly (Rs. 2,900 crore) in Bitcoin for the Bitzlato digital currency exchange, whose founder was arrested by US authorities last week for allegedly running a “money laundering engine,” blockchain data seen by Reuters show.

The Justice Department on January 18 said it charged Bitzlato’s co-founder and majority shareholder Anatoly Legkodymov, a Russian national living in China, with operating an unlicensed money exchange business that “fueled a high-tech axis of cryptocrime” by processing $700 million roughly (Rs. 5,800 crore) in illicit funds. Bitzlato had touted the laxity of its background checks on clients, the Justice Department said, adding that when the exchange did ask users for ID information, “it repeatedly allowed them to provide information belonging to “straw man” registrants.”

Binance, the world’s largest crypto exchange, was among Bitzlato’s top three counterparties by the amount of bitcoin received between May 2018 and September 2022, the US Treasury’s Financial Crimes Enforcement Network (FinCEN) said last week.

Binance was the only major crypto exchange among Bitzlato’s top counterparties, FinCEN said. It said the others to transact with Bitzlato were the Russian-language darknet drugs marketplace Hydra, a small exchange called LocalBitcoins and a crypto investment website called Finiko, which it described as “an alleged crypto Ponzi scheme based in Russia.” FinCEN did not detail the scale of the entities’ interactions with Bitzlato.

Hong Kong-registered Bitzlato was a “primary money laundering concern” related to Russian illicit finance, FinCEN added. It will ban the transmission of funds to Bitzlato by the US and other financial institutions from February 1. FinCEN said. It did not name Binance or other individual firms among those subject to the ban.

A Binance spokesperson said via email it had “provided substantial assistance” to international law enforcement to support their investigation of Bitzlato. The company is committed to “working collaboratively” with law enforcement, they added, declining to give details about its dealings with Bitzlato or the nature of its cooperation with such agencies.

Bitzlato, whose website says it has been seized by French authorities, could not be reached by Reuters. Legkodymov, has not made any public comment since his arrest in Miami last week and did not respond to emailed requests for comment.

Hydra’s operator, who was indicted in the United States, and a lawyer representing Finiko’s founder did not respond to requests to comment. Nor did Finland-based LocalBitcoins.

Reuters has no evidence that the Binance, LocalBitcoins or Finiko transactions with Bitzlato, which the Justice Department described as a “haven for criminal proceeds and funds intended for use in criminal activity,” broke any rules or laws.

However, one former US banking regulator and one former law enforcement official said Binance’s status as one of the top counterparties would focus Justice Department and US Treasury attention on Binance’s compliance checks with Bitzlato.

“I wouldn’t call it a warning shot over the bow, I would call it a guided missile,” said Ross Delston, an independent American lawyer and former banking regulator who is also an expert witness on anti-money laundering issues, referring to FinCEN’s citing of Binance and LocalBitcoins.

The Justice Department and FinCEN declined to comment.

Binance moved over 20,000 Bitcoin, worth $345.8 million roughly (Rs. 2,900 crore) at they time they were transacted, across some 205,000 transactions for Bitzlato between May 2018 and its closure last week, according to a review of previously unreported data. The figures were compiled by leading US blockchain researcher Chainalysis and seen by Reuters.

Bitcoin worth about $175 million roughly (Rs. 1,400 crore) was transferred to Binance from Bitzlato in that period, making Binance its largest receiving counterparty, the data show.

About $90 million roughly (Rs. 750 crore) of the total transfers took place after August 2021, when Binance said it would require users to submit identification to combat financial crime, according to the data from Chainalysis, which declined to comment. Such checks, Binance said in a blog last year, tackle “the funding and laundering of money from illicit activities.” Reuters could not determine whether Binance enforced its ID requirements with Bitzlato.

Darknet Market

Chainalysis, which is used by US authorities to track illicit crypto flows, had warned in February of last year that Bitzlato was high risk. In a report, Chainalysis said nearly half of Bitzlato’s transfers between 2019 and 2021 were “illicit and risky,” identifying almost $1 billion roughly (Rs. 8,200 crore) in such transactions.

The US action against Bitzlato comes as the Justice Department investigates Binance for possible money laundering and sanctions violations. Some federal prosecutors have concluded that the evidence collected justifies filing charges against executives including founder and CEO Changpeng Zhao, Reuters reported in December.

Reuters could not establish whether Binance’s dealings with Bitzlato are under review.

Binance, which does not reveal the location of its core exchange, has processed at least $10 billion (roughly Rs. 82,000 crore) in payments for criminals and companies seeking to evade US sanctions, Reuters found in a series of articles last year based on blockchain data, court and company records.

The reporting also showed that Binance intentionally kept weak anti-money laundering controls and plotted to evade regulators in the United States and elsewhere, according to former executives and company documents.

Binance disputed the articles, calling the illicit-fund calculations inaccurate and the descriptions of its compliance controls “outdated.” The exchange said last year it is “driving higher industry standards” and that it is seeking to improve its ability to detect illegal crypto activity.

Both Binance and Bitzlato were significant counterparties of the world’s largest darknet drugs marketplace Hydra. The Russian-language site was shut down by US and German authorities last year. The Justice Department said Bitzlato exchanged more than $700 million (roughly Rs. 5,700 crore) in crypto with Hydra, either directly or through intermediaries.

In an article published last June, Reuters reviewed blockchain data that showed that buyers and sellers on Hydra used Binance to make and receive crypto payments worth around $780 million (roughly Rs. 6,400 crore) between 2017 and 2022. A Binance spokesperson said at the time that the Hydra figure was “inaccurate and overblown.”

© Thomson Reuters 2023

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New FTX CEO Says Bankrupt Crypto Exchange Could Restart Business: Report

Bankrupt crypto exchange FTX is looking into the possibility of reviving its business, Chief Executive Officer John Ray told the Wall Street Journal on Thursday.

Ray, who took over the reins in November, has set up a task force to explore restarting FTX.com, the company’s main international exchange, he said in an interview with the WSJ.

The CEO also told the Journal that he would look into whether reviving FTX’s international exchange would recover more value for the company’s customers than his team could get from simply liquidating assets or selling the platform.

FTX’s native token FTT surged nearly 30 percent after the report.

“I’m glad Mr. Ray is finally paying lip service to turning the exchange back on after months of squashing such efforts!” FTX founder and former CEO Sam Bankman-Fried said in a tweet.

“I’m still waiting for him to finally admit FTX US is solvent and give customers their money back,” Bankman-Fried added.

A legal representative for FTX did not immediately respond to a Reuters request for comment.

Bankman-Fried has been accused of stealing billions of dollars from the exchange’s customers to pay debts incurred by his crypto-focused hedge fund, Alameda Research. He has pleaded not guilty to fraud charges.

The future of customer funds, however, remains unclear. Earlier this week, FTX said in a report to creditors that hackers stole about $415 million (roughly Rs. 3,369 crore) in crypto from its international and US exchanges since its bankruptcy in November.

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Binance’s Deal to Acquire Bankrupt Voyager Digital Faces US SEC Objection: All Details

The US Securities and Exchange Commission (SEC) has filed a limited objection to Binance.US’s proposed $1 billion (roughly Rs. 8,250 crore) acquisition of bankrupt cryptocurrency lender Voyager Digital, a bankruptcy court filing showed on Wednesday. The regulator pointed out the failure to include necessary information in Binance.US’s disclosure statement.

It said the purchase agreement lacks details on the crypto exchange’s ability to close the deal and has asked for more information on the nature of the company’s business operations following the deal, according to the filing.

Attorneys for Voyager and Binance.US did not immediately respond to requests for comment.

Last month, the US Committee on Foreign Investment in the United States (CFIUS) said its review could delay or block the deal.

Binance has been the subject of a money laundering probe by US prosecutors. Binance.US, based in California’s Palo Alto, has said that its separate American exchange is “fully independent” of the main Binance platform.

Towards the last leg of December, Binance recorded a large number of withdrawals following the collapse of the FTX crypto exchange, which succumbed to a liquidity crunch. At the time, CEO Changpeng Zhao had called this ‘normal market behaviour’ while attempting to pacify crypto investors.

Between 2021 and 2022, the overall crypto sector lost over $2 trillion (roughly Rs. 1,65,74,700 crore). The Russia-Ukraine war, the recession that followed the COVID-19 pandemic, repeated hack attacks, and the collapse of promising crypto projects like LUNA and FTX slashed investor engagement in the sector.

Under market stress, companies like CryptoCom and Binance among a number of others resorted to trimming their respective workforces, firms like BlockFi, Celsius, and Voyager Digital filed for bankruptcy.

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Binance’s Acquisition of Voyager Digital Could Be Delayed by US Review

Binance’s $1 billion (roughly Rs. 8,275 crore) acquisition of bankrupt crypto lender Voyager Digital could be delayed or blocked by a US national security review, according to a Friday bankruptcy court filing.

The crypto exchange’s US-based affiliate Binance.US intends to buy Voyager’s crypto lending platform with a bid that includes $20 million (roughly Rs. 165 crore) in cash and crypto assets that will be used to repay Voyager’s customers.

But the US Committee on Foreign Investment in the United States (CFIUS), an interagency body that vets foreign investments into US companies for national security risks, said Friday that its review “could affect the ability of the parties to complete the transactions, the timing of completion, or relevant terms.”

Attorneys for Voyager and Binance.US did not immediately respond to requests for comment Friday.

CFIUS has increasingly been used by Washington as a tool to stymie Chinese investment in the United States.

Binance is owned by Chinese-born and Singapore-based Changpeng Zhao and has no permanent headquarters. The company has been the subject of a money laundering probe by US prosecutors. Binance.US, based in Palo Alto, California, has said that its separate American exchange is “fully independent” of the main Binance platform.

CFIUS did not mention any specific security concerns raised by the Voyager acquisition in its court filing, but it said that bankruptcy courts have sometimes ruled that national security concerns can prevent a company from bidding on assets in bankruptcy.

Voyager filed for bankruptcy in July, months after the crash of major crypto tokens TerraUSD and Luna sent shockwaves across the digital asset industry.

Voyager initially planned to sell its assets to FTX Trading, but that deal imploded when FTX went bankrupt in November amid a frenzy of customer withdrawals and fraud allegations that led to the arrest of founder Sam Bankman-Fried.

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FTX Creditors May Number Over 1 Million, Crypto Exchange’s Bankruptcy Filings Show

Collapsed crypto exchange FTX outlined a “severe liquidity crisis” in US bankruptcy filings, which said the group could have more than 1 million creditors, as regulators opened probes and the crypto pain spread with the Wall Street Journal reporting BlockFi was planning layoffs and a possible bankruptcy filing. FTX’s late Monday filing to a US bankruptcy court said it was in contact with dozens of global regulators and had appointed five new independent directors at each of its main companies, including its sibling trading firm Alameda Research.

The exchange, which had been among the world’s largest, filed for bankruptcy protection on Friday in one of the highest-profile crypto blowups after traders pulled $6 billion (roughly Rs. 49,000 crore) from the platform in three days and rival exchange Binance abandoned a rescue deal.

“FTX faced a severe liquidity crisis that necessitated the filing of these cases on an emergency basis last Friday,” the court filing stated.

The exchange’s bankruptcy case includes more than 100,000 creditors, and this number could surpass 1 million, the filings said. The numbers were disclosed as FTX requested that multiple FTX group companies file one consolidated list of major creditors, rather than separate ones.

The documents also confirmed that FTX had responded to a cyberattack on November 11, after saying on Saturday it had seen “unauthorized transactions” on its platform.

FTX engaged Alvarez & Marsal as financial adviser, and said it has been in contact with the US Attorney’s Office, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and dozens of federal, state and international regulatory agencies over the past 72 hours.

The fallout has so far been limited to crypto exchanges and traders, but is featuring in mainstream policy discussions too.

Michael Barr, the Federal Reserve’s top Wall Street cop, on Tuesday said he is concerned about risks from the nonbank sector for which the US central bank and other regulators have poor visibility.

“That includes obviously crypto activity, but more broadly risks in parts of the financial system where we don’t have good visibility, we don’t have good transparency, we don’t have good data. That can create risks that blowback to the financial system that we do regulate,” he told the Senate Banking Committee.

Crypto industry peers and partners have been quick to distance themselves from FTX and tout their sound financials, though some, including US cryptocurrency broker Genesis Trading, have disclosed they are exposed to FTX, either having held tokens on the exchange or by owning FTX’s native token, FTT.

FTT plunged around 94 percent last week, while Bitcoin lost 22 percent.

Crypto lender BlockFi, which previously acknowledged it has significant exposure to FTX, plans to lay off workers while preparing to file for bankruptcy, the Wall Street Journal reported. The newspaper reported that BlockFi was recently working with Kenric Kattner, a bankruptcy partner at Haynes & Boone, citing people familiar with the situation. BlockFi and Kattner did not immediately respond to a request for comment.

Separately, bankrupt crypto lender Voyager Digital no longer plans to sell itself to FTX, Bloomberg reported, while Canadian crypto exchange Bitvo said it terminated its deal to be bought by FTX.

FTX founder and former chief executive Sam Bankman-Fried said his main goal is “to do right by customers,” in a tweet on Tuesday.

“I’m contributing what I can to doing so. I’m meeting in-person with regulators and working with the teams to do what we can for customers,” he said on Twitter.

Bloomberg reported that American and Bahamian authorities had been talking about bringing Bankman-Fried to the United States for questioning.

Bankman-Fried tried to raise cash from investors over the weekend to repay FTX clients even after the company had sought bankruptcy protection and he had resigned as CEO, the Wall Street Journal reported.

Bankman-Fried said he expanded his business too fast and failed to notice red flags at the exchange, in an interview with the New York Times published late on Monday.

Regulatory scrutiny

The sudden collapse of FTX, once seen as a mainstay of the crypto industry with a $32 billion (roughly Rs. 2.6 lakh crore) valuation as of January, has sparked investigations by financial regulators and other supervisory bodies around the world.

The Securities Commission of the Bahamas, in a statement dated Monday, said two PwC partners had been approved by the Supreme Court as joint provisional liquidators for FTX.

Several global regulators have removed licenses from local FTX units, and are looking into the company, and investigations by the U.S. Justice Department, the SEC and CFTC are also underway, a source with knowledge of the investigations told Reuters.

Some argued regulators should have taken action earlier.

Ken Griffin, founder and CEO of hedge fund Citadel, told the Bloomberg New Economy Forum in Singapore: “FTX is one of these absolute travesties in the history of financial markets. People will lose billions of dollars collectively and that undermines trust in all financial markets.”

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FTX Said to Have Confirmed Hacking Reports, Investigating ‘Unauthorised Transactions’

Collapsed crypto exchange FTX said on Saturday it was moving funds into offline storage following a series of “unauthorised transactions”, with analysts saying millions of dollars worth of assets had been withdrawn from the platform.

FTX US general counsel Ryne Miller said in a tweet on Saturday that the exchange was expediting the process of shifting all digital assets into cold storage “to mitigate damage upon observing unauthorised transactions.”

Cold storage refers to crypto wallets that are not connected to the internet to guard against hackers.

Late on Friday, Miller tweeted that he was “investigating abnormalities with wallet movements related to consolidation of FTX balances across exchanges.”

Figures from Singapore-based analytics firm Nansen showed a one-day net outflow from FTX of about $266 million (nearly Rs. 2,100 crore), with $73 million (nearly Rs. 580 crore) withdrawn from FTX US alone.

FTX did not respond to a Reuters request for comment.

Prior to Miller’s tweets, FTX officials appeared to confirm rumors of a hack on the firm’s Telegram channel, according to a CoinDesk report which said that the exchange had instructed customers to delete FTX apps and avoid its website.

“FTX has been hacked,” an account administrator in the FTX Support Telegram channel wrote in a message, according to CoinDesk.

Reuters could not immediately verify the details posted on FTX’s private Telegram channel.

FTX, affiliated crypto trading firm Alameda Research and about 130 of its other companies have filed for bankruptcy court protection from creditors in Delaware, FTX said on Friday.

The distressed crypto trading platform had struggled to raise billions as traders withdrew $6 billion (nearly Rs. 48,300 crore) in crypto tokens from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal this week.

© Thomson Reuters 2022

 

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Singapore Partners HSBC, Standard Chartered to Explore Token Use in Trade, Wealth Management

Singapore is exploring the use cases of blockchain technology to get its fintech sector ready for a futuristic revamp. The Monetary Authority of Singapore (MAS) has partnered with multinational banks Standard Chartered and HSBC to dive deeper into the use-cases of tokens in trade finance and wealth management. Two pilot projects are being launched in Singapore for experimentation. The United Overseas Bank (UOB) is also part of this initiative and is working with Marketnode, a digital asset platform built by the Singapore Exchange (SGX).

As part of the first pilot project lead by Standard Chartered, the involved parties will explore digital tokens that could be used to simplify and expand tools for trade finance.

The second pilot will focus on identifying the tokenisation of wealth management products. This will be headed by HSBC.

The move is aimed at transforming trade assets into transferable instruments.

“We aim to improve the accessibility to an asset class – which has largely been the domain of banks – with participation from a broader range of investors. Not only can we potentially narrow the $1.7 trillion (roughly Rs. 1,40,73,033 crore) global trade finance gap, this also offers investors the option to balance their portfolio with a digital token that has traceable intrinsic value,” a Coindesk report quoted Kai Fehr, global head of trade and working capital at Standard Chartered as saying.

Asset tokenisation is the process of creating digital units of a physical or virtual property that is held on blockchain networks. Each of the tokens of an individual property, amount for some percentage of the entity.

Tokenising an asset can increase the liquidity of the assets. The property owner could sell 50,000 tokens, instead of selling the entire property and losing its utility as a whole.

The news about these new pilot projects come after Singapore’s central bank announced that the first trades using tokenised version of the yen and the Singapore dollar completed successfully.

“Under the first industry pilot, DBS Bank, JP Morgan and SBI Digital Asset Holdings conducted foreign exchange and government bond transactions against liquidity pools comprising of tokenised Singapore Government Securities Bonds, Japanese Government Bonds, Japanese Yen (JPY) and Singapore Dollar (SGD),” the MAS said in an official post.

Investment in Singapore’s crypto and blockchain companies surged to $1.48 billion (roughly Rs. 11,800 crore) in 2021, ten times the previous year and nearly half the Asia Pacific total for 2021, according to KPMG.

Over 150 crypto companies applied for a new crypto payments licence from the MAS in 2020, although so far only a handful have received one.

On Tuesday, November 2, Stablecoin issuers Circle and Paxos have received operational approvals in Singapore. While Circle is the issuer of USD Coin (UDSC), Paxos is behind the Pax Dollar (USDP).

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