Can Bitcoin Hold Gains As Regulators Target Crypto Companies?
Hello! Welcome back to the Distributed Ledger. This is Frances Yue, crypto reporter at MarketWatch.
Binance, the world’s largest crypto exchange, was sued by the Commodity Futures Trading Commission on Monday for alleged violations of the federal laws governing commodity markets.
It’s the latest action US regulators have taken against crypto companies, as they redoubled efforts to increase oversight of the fledgling industry after several major companies collapsed resulting in billions in losses for investors.
Still, bitcoin had a remarkable first-quarter rally, up 70% since the start of the year, although it’s still down 60% from its all-time high in 2021. I wrote about possible reasons behind the rally here and here.
Find me on Twitter at @FrancesYue_ to share some thoughts about crypto, this newsletter, or your personal stories with digital assets.
The CFTC sued Binance
The CFTC alleged that Binance failed to register with the agency, despite its “solicit and reliance on clients in the United States to generate revenue and provide liquidity to the various markets,” according to a filing in federal court in Illinois on Monday.
The lawsuit filed by the CFTC is “unexpected and disappointing,” a Binance spokesperson told MarketWatch on Monday via email. The company has made significant investments over the past two years to ensure that the company does not have US users active on its platform, the spokesperson said.
US regulators are “adding muscle and showing that, hey, even if you’re not a crypto business in the US, even if you’re offshore, we have the power to come up to you and regulate,” said William Cai, co-founder and managing partner of Wilshire Phoenix.
Still, markets have largely brushed off the CFTC-Binance lawsuit, according to analysts at crypto trading firm QCP Capital. The lawsuit is likely to end in a manner similar to when in 2020 the CFTC sued another crypto exchange BitMEX, which was later ordered by the US District Court for the Southern District of New York to pay a penalty of $100 million, analysts at QCP noted.
The CFTC then alleged that BitMEX operated an unregistered trading platform and violated several CFTC regulations, including failing to implement required anti-money laundering procedures.
“In any case, multiple pending US government vs. Crypto lawsuits are nearly impossible for markets to price or time, and we believe markets will only react once the final decision is imminent,” analysts at QCP Capital wrote.
Macroeconomic conditions could have a more significant impact on the bitcoin price in the near term, as investors look for signs that could signal the US is in a recession, according to the analysts.
It remains unclear how bitcoin, which was created in 2009, might perform in a recession, the analysts noted.
Wilshire Phoenix’s Cai echoed the point. “It is unlikely that a major advance in crypto will continue until we see much better improved macroeconomic conditions for all markets,” Cai said.
SBF does not plead guilty to new charges
Sam Bankman-Fried, founder of bankrupt crypto exchange FTX, pleaded not guilty to five new federal charges in court Thursday, including one count of conspiring to bribe Chinese government officials.
The U.S. Attorney’s Office for the Southern District of New York wrote in an unsealed indictment Tuesday that in 2021, Bankman-Fried transferred more than $40 million in cryptocurrency to Chinese government officials. He allegedly directed the payment in an attempt to free up trading accounts in Beijing linked to Alameda Research, his crypto hedge fund, according to prosecutors.
In December, the US attorney for the Southern District of New York charged Bankman-Fried with eight counts of criminal securities, commodities and wire fraud, money laundering charges and conspiracy to defraud its clients and investors.
Crypto in a flash
Bitcoin gained 2.4% in the past week and was trading at around $27,962 on Thursday, according to CoinDesk data. Ether gained 0.3% in the same period to around $1,843.
| Biggest winners | Price | %7-day return |
| Kaspa | $0.03 | 86.1% |
| XRP | $0.54 | 27% |
| Mesh network | $6.37 | 25.6% |
| Flares | $0.04 | 14.8% |
| Stellar | $0.10 | 14.8% |
| Source: CoinGecko |
| Biggest losers | Price | %7-day return |
| Stacks | $0.93 | -20.6% |
| SingularityNET | $0.41 | -16.7% |
| Aptos | $11.05 | -16.6% |
| Optimism | $2.21 | -13.3% |
| Toncoin | $2.09 | -12.7% |
| Source: CoinGecko |
Crypto companies, funds
Shares in Coinbase Global Inc.
COIN
was down 3.5% for the week to around $63.96. MicroStrategy Inc.
MSTR
rose 5.8% so far this week, to $278.52.
Crypto mining company Riot Blockchain Inc.
RIOT
fell 3.2% to $9.17 as of Thursday. Shares of rival Marathon Digital Holdings Inc.
MARA
fell 7.7% to $7.81 in the past week. Ebang International Holdings Inc.
EBONY
traded 5.7% higher in the past week to around $7.09.
Overstock.com Inc. shares
OSTK
advanced 3% to $20.09 during the week.
Shares in Block Inc.
SQ
,
formerly known as Square, rose 10.4% to $68.31 for the week so far. Tesla Inc.
TSLA
shares rose 1.9% to $195.87.
PayPal Holdings Inc.’s
PYPL
the stock gained 2.4% for the week, trading at around $74.28. Nvidia Corp
NVDA
gained 0.7% to $273.91 in the past week.
Advanced Micro Devices Inc.
AMD
shares fell 2.3% to $98.01 for the week.
Among crypto funds, ProShares Bitcoin Strategy
BITO
rose 0.2% on the week to $17.24 on Thursday, while counterpart Short Bitcoin Strategy ETF
BITI
fell 0.3% to $21.11. Valkyrie Bitcoin Strategy ETF
BTF
dipped 0.1% in the past week to $11.01, while the VanEck Bitcoin Strategy ETF
XBTF
was down 0.3% to $28.05.
Grayscale Bitcoin Trust
GBTC
retreated 0.6% over the past five days to $15.81 on Thursday.
Must read
- Novogratz says ‘energetic’ crypto fans negate Crackdown Damage (Bloomberg)
- Crypto Bankruptcy Markets Boom After FTX’s Collapse (WIRED)
