Opening arguments began on October 4 in the trial of former FTX CEO Sam “SBF” Bankman-Fried in New York. The trial follows jury selection, which took place the previous day. Assistant United States Attorney Thane Rehn alleged that SBF used customer funds from FTX to enrich himself and gain credibility with politicians through donations. Rehn stated that SBF blamed a downturn in the crypto market but had actually committed fraud. Rehn also mentioned that witnesses, including SBF’s girlfriend, Caroline Ellison, and the CEO of rival exchange Binance, Changpeng Zhao, would testify about their involvement in stealing money. SBF’s attorney, Mark Cohen, argued that Ellison and Zhao shared some responsibility for the downfall of FTX.
In other news, Alex Mashinsky, the former CEO of crypto lender Celsius, will face trial in September 2024 on charges of fraud and market manipulation. Mashinsky will remain free on $40 million bail with travel and financial restrictions until then. Celsius filed for bankruptcy in July 2022, and Mashinsky was arrested in July of this year. He is accused of defrauding investors out of billions of dollars. The United States Commodity Futures Trading Commission, Securities and Exchange Commission, and Federal Trade Commission all have active suits against him.
Binance, a popular cryptocurrency exchange, continued to lose market share for the seventh consecutive month. HTX, Bybit, and DigiFinex were identified as the beneficiaries of Binance’s decline. An analysis by CCData reported by Bloomberg indicated that Binance’s share of the spot market fell from 38.5% to 34.3% in September. On the derivatives market, Binance’s share dropped from 53.5% to 51.5% in the same period. The struggles with U.S. regulators, the end of zero-fee trading, and Binance’s exit from the Russian market were cited as reasons for the decline.
A report from blockchain data analyst Nansen revealed that FTX had moved $4.1 billion worth of its native FTT tokens to Alameda Research between September and November 2022. FTX and Alameda Research controlled about 90% of the FTT supply. The report suggested that the tokens were used to support each other’s balance sheets. FTX also transferred $388 million in stablecoins to Alameda Research during the same period. The data indicated that Alameda Research would not have been able to proceed with its offer to buy out Binance’s FTT holdings due to the irregularities in their balance sheets. FTX subsequently filed for bankruptcy.
Valkyrie, an asset management firm, reversed its decision to purchase Ether in advance of receiving approval for its ETF from the U.S. Securities and Exchange Commission (SEC). Valkyrie had previously planned to offer investors exposure to ETF futures before launching its Bitcoin and Ether Strategy ETF. However, the firm stated in a filing with the SEC that it would not proceed with the purchase of ETH futures and would sell the futures it had already bought. Valkyrie is one of several financial firms expected to offer ETH futures ETFs, but the SEC has delayed decisions on several of them, possibly due to concerns about a U.S. government shutdown.
In the cryptocurrency market, Bitcoin is priced at $27,880, Ether at $1,640, and XRP at $0.52. The total market cap is $1.07 trillion. Trust Wallet Token, Avalanche, and Render are the top three altcoin gainers, while ApeCoin, THORChain, and Curve DAO Token are the top three altcoin losers of the week.
BitMEX founder Arthur Hayes predicts that surging bond yields will lead to “mass liquidity injections” in the financial markets, which will act as a catalyst for the next crypto bull market. He suggests that the current bear steepener, with long-term interest rates rising faster than short-term interest rates, will lead to money printing and ultimately benefit the crypto market.
A report from blockchain security platform Immunefi revealed a 153% year-on-year increase in crypto hacks and scams in the third quarter of 2023. The report noted that there were 76 incidents during this period, resulting in over $680 million in losses. The Mixin protocol hack, which resulted in a loss of over $200 million, was the largest hack of the quarter.
Bitcoin technical analysts warn of a potential price crash to $20,000. They note a “head and shoulders” pattern on the current chart, which typically indicates a price decline. However, it is important to note that cryptocurrency price predictions are speculative and can be highly unpredictable.