Crypto News Headlines (06-May-2022)

A federal judge ordered the three co-founders of BitMEX to pay a total of $30 million for operating an illegal cryptocurrency derivatives platform and violating money-laundering rules, the Commodity Futures Trading Commission (CFTC) said in a Thursday statement.

The U.S. District Court for the Southern District of New York ordered the platform’s founders – Arthur Hayes, Benjamin Delo, and Samuel Reed – to each pay a $10 million penalty in connection with CFTC accusations that they illegally conducted business with U.S. customers. The order followed the February resolution of a related Department of Justice case in which the three pleaded guilty to violations of the Bank Secrecy Act for running the crypto spot and derivatives trading platform without proper controls against money laundering.

Related to that plea, they are still awaiting sentencing “in the upcoming weeks,” according to the CFTC.

In 2020, the U.S. derivatives regulator first sanctioned the company and its founders for “unlawfully accepting orders and funds from U.S. customers to trade cryptocurrencies, including derivatives on bitcoin, ether, and litecoin.” This week’s penalties stem from that CFTC action, in which the company had previously agreed to pay the agency and the Financial Crimes Enforcement Network (FinCEN) $100 million.

In a boost for New Zealand-based startups and local investors, GD1 has launched a $5 million Web3 and crypto-focused venture capital fund. The fund, known as GD1 Crypto Fund 1, will be led by cryptocurrency and Web3 expert Nawaz Ahmed as a general partner. Remarking on what the incoming general partner is expected to bring, Vignesh Kumar, the co-managing partner at GD1, said in a press release:

One of our goals at GD1 has always been to diversify into new focus areas and continuously expand our knowledge base by onboarding individuals with diverse and interesting experiences and so we’re thrilled to have Nawaz join the GD1 team to help lead our web3/crypto strategy.

Kumar added that Nawaz’s work grants GD1 a vital platform to test the fund’s “thesis around the concept of permissionless innovation that web3 is built on.”

According to the statement, the fund’s first close is set for June and there are expectations it will be oversubscribed with early commitment from international Limited Partners. The statement, meanwhile, clarified that the GD1 Crypto Fund 1 is separate from GD1 Fund 3.

Not content to merely erase its recent gains, Bitcoin’s price today continued its drop until it reached its lowest point since late February.

Declining 8% in just 24 hours, Bitcoin dipped below $36,000 before stabilizing. It’s a similar story for the crypto market as a whole, which lost 7% during the same time frame; Ethereum shed 7% from yesterday’s price, and the rest of the top 10 faced losses of between 5% and 9%.

Just yesterday, crypto asset prices were noticeably higher, rising along with equities on Wednesday after the Federal Reserve announced an interest rate increase that was slightly lower than what many traders expected.

The Dow Jones Industrial Average recorded a 2.8% gain while tech-stack Nasdaq registered a 3.2% increase.

But that was a whole day ago.

Binance has committed $500 million to invest in Twitter alongside Elon Musk’s buyout of the social media service, the cryptocurrency exchange confirmed on Thursday.

Filings with the U.S. Securities and Exchange Commission show Binance is among a consortium of 18 other investors that includes venture capital firm Sequoia Capital and investment firm Fidelity.

“We’re excited to be able to help Elon realize a new vision for Twitter,” Changpeng Zhao, Binance’s CEO said.

“We hope to be able to play a role in bringing social media and web3 together and broadening the use and adoption of crypto and blockchain technology.”

In a letter to Abigail Johnson, CEO of asset management giant Fidelity Investments, on May 4, Senators Warren and Smith questioned the “appropriateness” of the company’s plan to let people invest a part of their 401(k) into an asset as risky as bitcoin.

The letter pointed out bitcoin’s volatile nature and also asked how Fidelity was going to tackle other risks such as fraud, theft, and loss. According to the Senators:

“Investing in cryptocurrencies is a risky and speculative gamble, and we are concerned that Fidelity would take these risks with millions of Americans’ retirement savings.”

Furthermore, the politicians argued that the company had “potential conflicts of interest,” which they believe could have affected Fidelity’s bitcoin decision. The letter pointed out that the asset manager has been involved in bitcoin and ethereum mining in the past, and also launched a Bitcoin Index Fund, for qualified investors, with a minimum investment threshold of $100,000.

Liquidations on crypto-tracked futures exceeded $400 million in the past 24 hours as bitcoin (BTC) dropped to as low as $35,700, setting the tone for a downturn in the broader crypto market.

Bitcoin futures racked up $191 million in losses alone, Coinglass data shows, suggesting most trading activity and open interest was limited to the largest cryptocurrency by market capitalization. Ether (ETH) futures followed with $64 million in losses.

Liquidations occur when an exchange closes a leveraged position as a safety mechanism due to a partial or total loss of the trader’s initial margin. That happens primarily in futures trading, which only tracks asset prices, as opposed to spot trading, where traders own the actual assets.

Bitcoin fell from $39,800 on Thursday morning to below the $36,000 support level following a sell-off in U.S. equities. Reports suggested the plunge came as traders priced in higher rates to curb inflation in the U.S., despite a rally on Wednesday after Federal Reserve Chair Jerome Powell said the country would do everything in its power to curb inflation.

The IMF has reportedly said the CAR’s recent decision to adopt bitcoin poses a number of challenges for the country and the region. The comments by the global lender mark the first time it has publicly reacted to CAR’s decision to make bitcoin legal tender.

As has been reported by News, the IMF was and is still critical of a similar decision that was made by El Salvador in 2021. Following the initial announcement, the global lender warned the adoption of bitcoin would pose several macroeconomic, financial, and legal issues. In January 2022, the IMF urged El Salvador to drop the bitcoin law, but this was rejected by the latter.

Reacting to the CAR’s decision, the IMF again warned the African country’s adoption of bitcoin posed legal and economic challenges.

“The adoption of Bitcoin as legal tender in C.A.R. raises major legal, transparency, and economic policy challenges. IMF staff are assisting regional and Central African Republic’s authorities in addressing the concerns posed by the new law,” the IMF reportedly said in emailed responses to Bloomberg.

The Luna Foundation Guard (LFG) just made its biggest Bitcoin purchase yet: 37,863 coins, worth $1.5 billion at the time of writing. 

That nearly doubles the Guard’s previous reserves from 42,530.82 BTC up to 80,394 BTC. The group reportedly facilitated the purchase by swapping $1 billion in UST stablecoin for Bitcoin with Genesis Trading, while completing another $500 million over-the-counter purchase with help from Three Arrows Capital. 

This purchase brings Terra’s total reserves to more than $3 billion, the bulk of that in Bitcoin. It holds smaller shares of LUNA, AVAX, and USDT and USDC stablecoins.

The LFG is a foundation established to guide the development of the Terra network and its burgeoning ecosystem. Its reserve is intended to provide backing for Terra’s own stablecoin, TerraUSD (UST)—currently the third-most-valuable stablecoin on the market, trailing only USDT and USDC while slightly edging out BUSD.

According to the official blog post, Opera revealed that the latest integration of its Crypto Browser with BNB will enable users to purchase BNB tokens with fiat as well as send and receive the asset via the built-in crypto wallet.

Additionally, users will also be able to access BNB Chain-based decentralized applications. Besides transactions and funds, Opera will also provide access to popular decentralized exchanges such as PancakeSwap, 1inch, BiSwap, as well as products like DRIP Venus, Tranchess, Treehouse, ApeSwap, and AutoShark Finance.

Opera also stated that this partnership has the potential to take Web3 adoption to the next level. The announcement further read,

“With today’s announcement of BNB Chain integration, Opera continues to streamline mainstream access to Web3 and beyond. With the Opera Crypto Browser, existing users of BNB Chain dApps and token holders alike can now join the hundreds of millions of Windows, Android, and Mac users worldwide in having unique Web3 access functionality at their fingertips.”

Tesla CEO Elon Musk has secured funding from 18 companies to purchase Twitter Inc., his filing with the U.S. Securities and Exchange Commission (SEC) on Thursday shows.

The SEC filing explains that Musk received equity commitment letters from these investors on May 4 “providing for an aggregate of approximately $7.139 billion in new financing commitments” in connection with his proposed acquisition of Twitter.

Some pro-crypto companies are on the list of investors, including Sequoia Capital Fund which committed $800 million, crypto exchange Binance which committed $500 million, AH Capital Management (aka Andreessen Horowitz, a16z) which committed $400 million, and Fidelity which committed over $300 million.