Kategorie: Crypto News

• FTX filed for bankruptcy in November and Senator Patrick Toomey says Congress should move to provide regulatory clarity on crypto, adding that FTX’s collapse has nothing to do with cryptocurrency.
• According to the lawmaker, cryptocurrency is software that has nothing instrinsically good or evil about it.
• He says the ‘code committed no crime’ and that the US cannot ban crypto  as that only pushes it offshore.

US Senator Patrick “Pat” Toomey Jr., a crypto-friendly lawmaker who believes regulatory clarity can benefit the sector, says the FTX case is about the crimes committed by Sam Bankman-Fried and others, and that the saga has nothing to do with cryptocurrency or the underlying technology.

Toomey, who said in an interview with CNBC’s ‘Squawk Box’ on Tuesday that the indictment of the former FTX CEO should not be an indictment of crypto, maintains that the ‘code committed no crime.” 

He was commenting on FTX’s implosion following a House Committee hearing.

“The wrongful behaviour that occurred here is not specific to the underlying asset. What appears to have happened here is the complete breakdown in the handling of those assets,” he said.

‘Nothing intrinsically good or evil about software’

According to Senator Toomey, handling of the saga going forward should not involve calls to ban crypto altogether until regulations are in place. Indeed, his view is that FTX would not have happened if Congress had moved to offer the regulatory guidelines necessary to promote the ecosystem and help robust, well-regulated US-based exchanges take root.

That hasn’t happened, and it’s important to note that there’s a difference between crypto as the underlying software and the companies built on top of it – like FTX. He added:

“There’s nothing intrinsically good or evil about software…it’s about what people do with it. And with this analogy in mind, what we should all understand here is one simple thing – the code committed no crime. FTX and cryptocurrency are not the same thing.”

No one banned mortgages after 2008

The lawmaker also stated that it’s the FTX founder and his team that were ‘opaque’ and dishonest. Not the crypto.

He referenced the 2008 financial crisis, noting that no one moved to ban mortgages following the crisis, nor the US dollar when certain individuals mismanaged customer funds. Likewise, it would be inconceivable for people to suggest a ban on crypto – as the problem is clearly FTX and the misuse of customer funds.

Pause crypto! Toomey says ‘no way’, and that would only succeed in pushing the industry offshore.

“Short of enacting draconian, authoritarian policies, cryptocurrency cannot be stopped. If we try, the technology will simply migrate offshore. Cryptocurrency does not need brick and mortar facilities to operate.”

To help streamline the crypto sector and have properly regulated American crypto exchanges, he points to Congress.

The collapse of FTX is not an indictment of crypto. It’s an indictment of those who misused customer assets.

As I’ve said for months, Congress needs to give regulatory clarity so business flows to prudent, sensible, well-regulated American crypto exchanges. pic.twitter.com/oXKZdawO0m

— Senator Pat Toomey (@SenToomey) December 14, 2022

Senator Toomey’s remarks on Wednesday come after Bankman-Fried’s arrest in the Bahamas. The former FTX CEO faces several criminal charges from the US Department of Justice, US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). 

As reported earlier, new FTX CEO John J Ray III believes what happened at FTX is ‘old-fashioned embezzlement.’

The post US Senator Toomey on FTX and SBF: ‘the code committed no crime’ appeared first on CoinJournal.

Key Takeaways

• Binance has seen $3 billion of funds leave the platform in the last week
• USDC withdrawals were halted but are now back up
• Flood of outflows highlights how low confidence in the space is

Binance is in the thick of it once more.

The world’s largest cryptocurrency exchange is facing an unprecedented surge in withdrawals from its platform. Over $3 billion in funds has fled the platform in the last week, according to on-chain data.

This follows several stories which have spooked investors. The first was the report that criminal charges could be filed against CEO Chengpeng Zhao, in relation to a years-long investigation into money laundering.

Then there was the halting of withdrawals of the USDC stablecoin, which was due to an unexpectedly high outflow taking place outside of banking hours (the swaps had to be routed through New York-based banks). The withdrawals of USDC have since been resumed as normal, with a total downtime of about 8 hours.

On USDC, we have seen an increase in withdrawals. However, the channel to swap from PAX/BUSD to USDC requires going through a bank in NY in USD. The banks are not open for another few hours. We expect the situation will be restored when the banks open. 1/2

— CZ 🔶 Binance (@cz_binance) December 13, 2022

Customers in panic after FTX collapse

But the real reason for the flood of withdrawals is that FTX’s spectacular collapse, for which former CEO Sam Bankman-Fried was arrested Monday, has severed trust in the crypto industry. 

This is not necessarily fair to the honest firms out there, but it makes sense. Customers need to look after themselves first, and it is only logical to withdraw right now until the dust settles, as there really is no downside to doing so. 

Binance’s official proof of reserves address shows that outflows in Bitcoin have also been significantly elevated over the last 48 hours:

Binance is also not helping itself with its shoddy attempt at proof of reserves, which has done nothing to quell concern in the industry. The disclosures do not show liabilities, meaning they are redundant when it comes to making a fair assessment of whether all assets are backed.

The concern around the halted USDC withdrawals and lack of transparency with proof of reserves ultimately was the straw that broke the camel’s back in terms of trust, and investors flooded for the exits. 

Zhao warns of “bumpy” road ahead

Of course, funds flowing out is perfectly OK. That is, assuming everything is above board, for which there is no reason to believe is not the case. Nonetheless, the fact that customers cannot verify themselves and must trust the word of a CEO is not exactly reassuring. 

We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us.

I actually think it is a good idea to “stress test withdrawals” on each CEX on a rotating basis. 💪

1/2 https://t.co/uF9lLPDSyS

— CZ 🔶 Binance (@cz_binance) December 13, 2022

Especially when, you know, a certain other CEO burned the entire industry last month. 

But this is not the same situation as FTX. 

“You’re definitely seeing larger than normal withdrawals from Binance. And so it is definitely worth keeping an eye on but as far as I can tell at this point in time, this is very different from the FTX situation“, said Alex Svanevik,  CEO of blockchain analytics company Nansen, in an interview with CNBC.

Binance CEO Zhao affirmed that while there are challenges ahead, Binance will be just fine. “While we expect the next several months to be bumpy, we will get past this challenging period – and we’ll be stronger for having been through it”, Zhao wrote in an internal memo seen by Bloomberg. 

Industry must change

The bottom line is that, despite what you may believe about Binance, the reality is that there is a lack of transparency here and investors are paranoid given the slew of scandals that have rocked the industry this year. 

Whatever semblance of trust was left after the LUNA fiasco, which felled numerous firms such as the crypto lender Celsius, is now broken, following the staggering scale of the FTX debacle. 

Binance has an obligation to hold itself to a higher standard, now that it holds such a dominant share of the market. Thus far, its efforts around proof of reserves have been lacking, with the crypto world again relying on the tweets of a CEO to assure them everything is going just fine. 

The post Withdrawals flood out of Binance, CZ warns of “bumpy” road ahead appeared first on CoinJournal.