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India’s Cryptocurrency Position Said to Be Vindicated Amid Global Crypto Market Downturn

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By ANI | Updated: 5 July 2022

India’s conservative position on not encouraging cryptocurrency is being rapidly vindicated by the negative experiences of various crypto funds with the latest being Singapore’s Three Arrows crypto fund. Experts say that India correctly predicted the adverse economic headwinds and perhaps saved a lot of people from economic ruin.

Last week, Singapore-based crypto hedge fund, Three Arrows Capital (3AC), was reported by various media sources to be in trouble. It is one of the high-profile crypto investment firms that has run into difficulties recently as the crypto market valuation plunged.

It has fallen by about a third since it hit its peak sometime in November last year.

In the latest sign of the impact of the crypto market downturn, both Bloomberg and Reuters quoted sources that said that 3AC has entered liquidation after failing to make payments on a loan of 15,250 Bitcoins (approximately Rs. 16,35,165) and $350 million (roughly 2,800 crore) worth of USDC, a stablecoin.

Reuters reported that its sources told it that a court in the British Virgin Islands, where 3AC’s fund is incorporated, issued the liquidation order on June 27. The Commercial Court there orders a company to be liquidated if it is regarded as insolvent because it cannot pay its debts.

It is less common for companies to voluntarily liquidate.

3AC, one of crypto’s best-known hedge funds was founded by former Credit Suisse traders Zhu Su, a Singaporean, and Kyle Davies at the kitchen table of their apartment in 2012. Zhu famously predicted the bottom of the last crypto cycle in December 2018 when Bitcoin was worth about $3,850 (roughly Rs. 3,05,000).

According to blockchain analytics firm Nansen, its blockchain holdings were once worth close to $10 billion (roughly Rs. 79,100 crore).

To add to its troubles, Singapore central bank, the Monetary Authority of Singapore (MAS) last week reprimanded 3AC for breaching financial regulations.

On the other hand, the Indian regulators had attempted to ban cryptocurrencies only to be overturned by the Supreme Court.

To dampen crypto trading, a one per cent tax deducted at source (TDS) on crypto transactions kicked in on July 1. The one per cent TDS liability is the second major provision of India’s recently introduced crypto tax law after a 30 percent capital gains tax on all transactions took effect on April 1.

India’s crypto community has been up in arms over the new provisions and warned that it will have a severely negative impact on crypto trading in India, especially with the global market slump.

Sumit Gupta, co-founder and CEO at CoinDCX, tweeted that this tax “would do more harm than good.” He said developers and entrepreneurs might flee to friendlier jurisdictions and added that a 30 per cent taxation rate coupled with one per cent TDS is “unfair.”

The Indian government has been very careful not to legitimise crypto trading. It says that they are taxing crypto because people are profiting from it.

“We have been cautioning against crypto and look at what has happened to the crypto market now,” said Reserve Bank of India (RBI) Governor Shaktikanta Das in a CNBC-TV18 interview earlier this year after the value of cryptocurrencies took a tumble. He had warned about the dangers of investing in something that has no underlying value. “Our position remains very clear, it will seriously undermine the monetary, financial and macroeconomic stability of India.”

According to CoinGecko, the total market cap of cryptocurrencies has shrunk by more than a third, down to around $930 billion (roughly 74 lakh crore) from a high of about $3 trillion (roughly 240 lakh crore) reached in November of 2021.

Although the crypto market has been on the decline this year, there isn’t a specific reason for this. Analysts have suggested that the wider global economic situation of higher interest rates, and a looming recession, coupled with investors’ lower risk appetite has caused the decline.

This has caused various calamities in the market. Some believe a crypto winter has arrived. Besides 3AC, among the recent disasters is the collapse of terra USDC and sister coin Luna, and liquidity issues at lenders Celsius Network and Babel Finance. Earlier, crypto lender BlockFi and prime brokerage Genesis said they had to liquidate one of their large counterparties recently. In June, crypto giant Coinbase slashed 1,100 jobs. Crypto broker Voyager Digital, reportedly the party behind the default notice served on 3AC, has also been impacted.

“I think given this price drop, from the all-time high of $68,000 (roughly Rs. 54,00,000) to $20,000 (roughly Rs. 16,00,000) now, it will probably take a while to get back. It probably will take a few months or a couple of years,” Changpeng Zhao, the founder of the world’s largest crypto exchange, Binance, told The Guardian. He added that bitcoin may take years to recover from the recent crash.

However, other market participants remain bullish over crypto’s future.

“What I expect from bitcoin is volatility short-term and growth long-term,” said Kiana Danial, founder of Invest Diva and author of Cryptocurrency Investing For Dummies.

PricewaterhouseCoopers’ fourth annual global crypto hedge fund report published in June showed that although the crypto market is bearish now, 35 percent of fund managers in its survey predicted that Bitcoin will be trading over $50,000 (roughly Rs. 40,00,000) by the end of 2022 and a further 42 percent forecast that it will trade between $75,000 (roughly Rs. 60,00,000) to $100,000 (roughly Rs. 80,00,000) by the year’s end.

JPMorgan Chase believes that the current phase of cryptocurrency deleveraging will not last much longer. In a note published on June 29, it supported this prognosis by saying that it has been observed that “crypto entities with the stronger balance sheets are currently stepping in to help contain the contagion.” It has also been noticed that venture capital funding which is “an important source of capital for the crypto ecosystem, continued at a healthy pace in May and June.”

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Bitcoin falls below $19,000 as cryptos creak under rate hike risk

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By: Reuters, Updated September 19, 2022

SINGAPORE, Sept 19 (Reuters) – Cryptocurrencies fell to fresh lows on Monday on regulatory concerns and as investors globally turned shy on risky assets with interest rate rises looming around the world.

Bitcoin , the biggest cryptocurrency by market value, fell about 5% to a three-month low of $18,387.

Ether , the second largest cryptocurrency, dropped 3% to a two-month low of $1,285 and is down more than 10% in the last 24 hours. Most other smaller tokens were deeper in the red.

The Ethereum blockchain, which underpins the ether token, had a major upgrade over the weekend called the Merge that changes the way transactions are processed and cuts energy use.

The token’s value has fallen amid some speculation that remarks last week from U.S. Securities and Exchange Commission Chairman Gary Gensler implied the new structure could attract extra regulation. Trades around the upgrade also were unwound.

“It’s speculation as to what might or might not happen,” said Matthew Dibb, COO of Singapore crypto platform Stack Funds, on the regulatory outlook.

“A lot of the hype has come out of the markets since the Merge,” he said. “It’s really been a sell-the-news type of event,” he added, given the nervous global backdrop, and said ether could test $950 in coming months.

“Looking at the landscape right now, both fundamentally and technically, it’s not looking great. There’s no immediate bullish catalyst that we can see that’s going to prop up these markets and bring in a whole lot of new money and liquidity.”

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Bitcoin once again slips below $20,000

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By: Reuters, September 18, 2022

Sept 18 (Reuters) – Bitcoin on Sunday dropped 1.54% to $19,804, slipping from the 20,000 mark after losing $310 from its previous close.

The world’s biggest and best-known cryptocurrency is down 58.9% from the year’s high of $48,234 on March 28.

Ether , the coin linked to the ethereum blockchain network, dropped 3.2 % to $1,422.1 on Sunday, losing $47 from its previous close.

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U.S. seizes $30 mln in crypto from North Korea-linked hackers

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By: Reuters, September 9, 2022

Sept 8 (Reuters) – The United States has seized over $30 million in cryptocurrency stolen by North Korean-linked hackers Lazarus from the popular online game Axie Infinity, crypto intelligence firm Chainalysis said on Thursday.

The company said in a blog post it played a role in the recovery with U.S. law enforcement and other crypto organizations, without naming them, in the first ever recovery of stolen cryptocurrency by a North Korea hacking group.

Chainalysis and North Korea’s mission to the United Nations did not immediately respond to requests for comment. The FBI did not immediately respond to a request for comment.

The seizures represent about 10% of the total funds stolen in March from Ronin Network, a sidechain built for the play-to-earn game Axie Infinity, Chainalysis said.

Ronin said in March hackers stole about $615 million in cryptocurrency.

“We estimate that so far in 2022, North Korea-linked groups have stolen approximately $1 billion of cryptocurrency from DeFi protocols,” Chainalysis said. He was referring to decentralized finance protocols, an umbrella term for financial services offered on public blockchains.

The U.S Department of Treasury in May sanctioned virtual currency mixer Blender, saying it was used in the laundering process for the Axie Infinity heist.

The Treasury Department in April also linked Lazarus to the attack.

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Crypto gaming firm Animoca Brands raises $110 million

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By: Reuters, September 8, 2022

LONDON, Sept 8 (Reuters) – Hong Kong-based blockchain gaming developer Animoca Brands has raised $110 million from investors, the company said in a statement on Thursday.

The company said the fund raising values the company “similar to its previous funding round” but did not specify its new valuation.

In July, Animoca said it had a valuation of around $5.5 billion. read more

(This story corrects paragraph 1 to read Hong Kong-based not Singapore)

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Binance to convert users’ USDC into its own stablecoin

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By: Reuters, September 6, 2022

Sept 5 (Reuters) – Binance, the world’s largest crypto exchange, said on Monday it is introducing “BUSD Auto-Conversion,” which will be used to convert any existing user balances and new deposits of USD Coin (USDC), Pax Dollar (USDP) and True USD (TUSD) into its own stablecoin.

The move is intended to enhance liquidity and capital efficiency for users, the company said in a statement.

Binance said it will remove and cease any trading on spot pairs that include USDC, USDP and TUSD; it will start the conversion on Sept. 29.

USDC, which is principally operated by Circle Internet Financial and is the second largest stablecoin, has a nearly $51.9 billion market capitalization. Binance’s stablecoin, BUSD, is valued at about $19.4 billion, according to crypto data provider CoinGecko.

USDC products affected include saving accounts, DeFi staking subscriptions and crypto loans, which will be closed and liquidated on Sept. 23.

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Crypto Exchange FTX Ordered to Halt ‘False and Misleading’ Claims by US Bank Regulator

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By Reuters | Updated: 20 August 2022

A US bank regulator ordered crypto exchange FTX on Friday to halt what it called “false and misleading” claims the exchange had made about whether funds at the company are insured by the government. The Federal Deposit Insurance Corporation said a July tweet by Brett Harrison, head of FTX’s US operations, contained misleading claims that funds held at and stocks purchased through FTX were FDIC insured, and ordered the company to remove any misleading language from its social media accounts and websites.

In the tweet, which Harrison has since deleted, he stated that direct deposits from employers to the crypto exchange are “stored in individually FDIC-insured bank accounts” and that stocks purchased via FTX US “are held in FDIC-insured” brokerage accounts. The FDIC said in its cease and desist letter to FTX US that those statements implied that FDIC insurance was available for cryptocurrency and stock holdings, and that the agency does not insure brokerage accounts.

The order, one of five sent to crypto firms by the FDIC on Friday, comes as regulators have ramped up efforts to police crypto firms that may be misleading investors on whether their funds enjoy a government backstop. The issue has come to a head of late, as turmoil in the crypto market has led to stress and the collapse of some high profile firms.

The bank regulator issued a similar cease and desist letter to bankrupt crypto firm Voyager Digital, arguing that the company had misled customers by claiming their funds with Voyager would be covered by the FDIC. Later, the FDIC issued an advisory urging banks dealing with crypto companies to ensure that customers are aware of what types of assets are government-insured, particularly in cases where firms offer a mix of uninsured crypto products alongside insured bank deposit products.

© Thomson Reuters 2022

In a tweet on Friday, FTX CEO Sam Bankman-Fried emphasised FTX is not FDIC-insured, and apologised if anyone misinterpreted previous comments.

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