Read in the Digest:
- Changpeng Zhao says Binance will survive any crypto winter amidst FUD
- The Bahamas Chief Magistrate denied Bankman-Fried a $250k bail
- Stablecoin issuer Tether announces plans to reduce secured loans to zero
- Australia will release a ‘token mapping’ consultation paper in early 2023
- ETH rallies to $1,350, but derivatives metrics remain neutral to bearish
Changpeng Zhao Says Binance Will Survive Any Crypto Winter Amidst FUD
Changpeng “CZ” Zhao, the founder of the world’s largest crypto exchange, Binance, has sent a memo to his staff, assuring them that the exchange is in a good financial position and “will survive any crypto winter.”
Despite his belief in the future of Binance, CZ warned: “the next several months to be bumpy.” However, he says that Binance “will get past this challenging period – and we’ll be stronger for having been through it.”
The message from the Binance boss comes amidst a renewed FUD — or fear, uncertainty, and doubt — within the crypto ecosystem. A possible bank run was discussed on Binance a month after CZ triggered a bank run on FTX.
The FUD led to crypto outflows on Binance surging to their highest point in six months. According to data from the crypto analysis platform Nansen, Binance recorded over $3 billion in net outflows.
Binance token flow: Source: Nansen
Flipsider:
- Investor worry comes regardless of the recent audit that showed that Binance had overcollateralized assets in its reserves.
Why You Should Care
As the head of the largest crypto exchange, CZ is doing all he can to reassure customers that Binance will not go through an FTX-like incident.
Bankman-Fried Denied a $250k Bail by the Bahamas Chief Magistrate
Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, has been denied bail by a judge in the Bahamas in his first court appearance following his arrest on Monday, December 12th.
The petition for Bankman-Fried’s release was denied by the Bahamas Chief Magistrate JoyAnn Ferguson-Pratt, who cited a “great” risk of flight and ordered that he be kept on remand at a correctional facility until February 8th, when he will appear in court next.
Bankman-Fried’s $250,000 cash bail denial comes on Tuesday, the same day U.S. authorities charged the former FTX boss with “one of the biggest financial frauds in US history.”
In addition, prosecutors have accused SBF of scheming to illegally funnel millions into politics ahead of the 2022 midterm elections, misappropriating customer funds in the process. SBF was also accused of donating in the name of others.
Flipsider:
- Bankman-Fried says he is reviewing the charges with his legal team and shouldn’t be jailed because of his vegan diet and ADD diagnosis.
Why You Should Care
Bankman-Fried’s case was moved to February 8th as the judge tries to avoid rushed judgment in a multi-jurisdictional case.
Stablecoin Issuer Tether Announces Plans to Reduce Secured Loans to Zero
In response to growing FUD about having a potentially unreliable reserve, Tether, the issuer of the USDT stablecoin has announced that it plans to reduce the secured loans in its reserves by 2023.
The strongest criticism of Tether has come from mainstream media, particularly the Wall Street Journal, which called out Tether early this month for its $6.1 billion “secured loans” – lending out USDT rather than selling them upfront for hard currency.
In addition to the WSJ, America’s leading crypto exchange Coinbase (NASDAQ:COIN) recently advised its users to convert their Tether (USDT) tokens into USD Coin (USDC) as the latter was more stable and trustworthy than Tether.
To end the unending criticism from the mainstream media, Tether has pledged to eventually stop lending out funds from its reserves, even though they are currently over-collateralized and covered by “extremely liquid assets.”
Flipsider:
- The attack on USDT appears to be part of a stablecoin war, in which Binance takes sides with the USDT.
Why You Should Care
Tether looks to calm the criticism of the mainstream media. Its mission is to restore faith in the crypto market.
Australia Will Release a ‘Token Mapping’ Consultation Paper in Early 2023
On Wednesday, December 14th, Australia’s Treasury announced that the nation will release a consultation paper in early 2023 as part of its token mapping initiative, which was first announced in August 2022.
Australia’s ‘token mapping’ work involves uncovering the characteristics of all digital asset tokens in Australia, including charting the type of crypto asset, its underlying code, and any other defining technological feature.
According to Australian Treasurer Jim Chalmers, the next step now “include the release of a consultation paper in early 2023 to inform what digital assets should be regulated by financial services laws.”
Chalmers explains that, after the nation’s token mapping has been released, the Australian Government will consult on a “custody and licensing framework next year” before finally introducing crypto legislation.
Flipsider:
- On December 8th, Australia’s Reserve bank published a stablecoin-focused report suggesting that regulators are figuring out how to safely integrate them into the financial ecosystem.
Why You Should Care
While trying to “modernize Australia’s financial system” through crypto, the Australian government has prioritized the public’s safety.
ETH Rallies to $1,350, but Derivatives Metrics Remain Neutral to Bearish
In the late hours of Tuesday, December 13th, Ethereum (ETH) experienced its biggest rally in weeks as the crypto market attempts to break out of the bearish trend worsened by the FTX collapse.
The 24-hour price chart for Ethereum (ETH). Source: CoinMarketCap
ETH rallied by more than 4.5%, causing its price to shoot above $1,350 for the first time since the collapse of FTX more than a month ago. The rally is part of an uptrend that has seen the price of ETH rise by 8% over the last seven days.
The 7-day price chart for Ethereum (ETH). Source: CoinMarketCap
Despite the sustained rally, Ethereum’s derivatives metrics remain neutral to bearish as Binance faced $1.1 billion in withdrawals over 24 hours and regulatory agencies mount more lawsuits against Sam Bankman-Fried.
The two-month futures annualized premium of ETH, which should trade between +4% to +8% in healthy markets, currently remains below 0%. This indicates fear and an absence of leverage in buyers’ demand for Ethereum.
Flipsider:
- Traders predict Ethereum’s rally to $1,300 to have a limited impact and possibly retrace should the Fed take a hawkish stance on its interest rate hike on Wednesday.
Why You Should Care
Derivative metrics remain neutral to negative because investors largely await the next major move from regulators that could determine the direction of the crypto sector.