Crypto Intelligence - Page 286

Central bank digital currencies (CBDCs) could facilitate cross-border transactions to transform the global economy, Moody’s Investor Service said in a report.

In the document, it said that cross-border CBDC transactions would require new infrastructure, limiting the role of banking institutions significantly.

However, banks could also sharply reduce or remove settlement risks with the emerging technology.

The report said: “Banks would be able to make, clear, and settle cross-border payments at low cost and in seconds without needing to sign up to multiple payment systems or rely on correspondent banks in other countries.”

The technologies could also reduce banking profits from “payments, correspondent services and likely also from foreign-exchange transactions.”

It added: “In a CBDC-driven economy, banks may well need to redesign their operations. They may be obliged to join new networks and create the infrastructure necessary to support CBDC interoperability at scale, which will impose a burden on resources in the short term.”

Continuing, the report explained that CBDCs could resolve interoperability concerns over time with help from the Bank for International Settlements.

The report concluded: “Central banks may need to compromise on some of the decision-making to make their CBDCs interoperable.”

It also added that “digital islands” could surface, where some countries could conduct transactions while excluding or failing to facilitate transactions with others.

Moody’s Downgrades US, Florida’s DeSantis Doubles Down

The news comes after Moody’s downgraded US banks to “negative” last week. Numerous countries have debated creating a framework for CBDCs, including the United Kingdom, Japan, South Korea, the United States, and European Union, among others. China has rolled out numerous CBDC payment pilots, with customers successfully purchasing goods and services with the ‘red packet’ system.

Despite this, Florida Governor Ron DeSantis has opposed a federal CBDC for the United States and has vowed to block its use in the Sunshine State.

A group of states have backed DeSantis’ efforts to block the rollout of a federally-supported digital stablecoin, citing alleged ‘woke ideology’ and curtailed freedoms.

A new analysis of Silicon Valley Bank (SVB) has found that numerous losses, a massive loan portfolio, and other issues have led to its collapse.

The SSRN report cited around 190 banks across the United States that could potentially see bank runs as a result of the ongoing crisis.

Explaining the looming risk triggered by uninsured deposit withdrawals, the report read: “Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to insured depositors, with potentially $300 billion of insured deposits at risk.”

Central banking monetary policies could pose significant risks to government bonds, mortgages, and other assets, sparking further banking losses, it added.

It defined banks failing to hold sufficient market-to-market asset values and repay all insured deposits as insolvent.

Rising US interest rates plummeted asset market values across the US banking system to a total of $2 trillion USD. The report concluded: “Recent declines in bank asset values significantly increased the fragility of the US banking system to uninsured depositors runs.”

“Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to insured depositors, with potentially $300 billion of insured deposits at risk. If uninsured deposit withdrawals cause even small fire sales, substantially more banks are at risk,” it read.

The news comes after SVB collapsed in March due to rising Fed rates, leading to a massive liquidity crisis and subsequent bank runs. The bank has supplied the global tech industry with critical loans and leaves a massive hole in funding for many of the world’s tech startups and firms, among others.

Banking giant HSBC bought the British arm of SV Global for only £1 following the former’s bankruptcy.

READ: Why Are Crypto & Tech PR Agencies Asking Employees to Complete the CIACM MMQ

Montenegrin police have allegedly arrested a man believed to be cryptocurrency fugitive Do Kwon, reports revealed on Thursday.

Authorities arrested the Terraform creator, after his cryptocurrency plummeted in value, causing investors to lose over $40 billion USD.

US officials slapped the executive with allegedly orchestrating a “multibillion-dollar crypto asset securities fraud.”

Filip Adzic, Montenegro’s interior minister, revealed the arrest update after tweeting that “Montenegrin police detained a person suspected of being one of the most wanted fugitives, South Korean citizen Do Kwon, co-founder and CEO of Singapore-based Terraform Labs.”

He added that Do Kwon had allegedly travelled under fake documents, and authorities are currently waiting to confirm his identity.

The news comes after the collapse of Do Kwon’s Terraform enterprise, Terra Luna, and TerraUSD tokens, sending shockwaves across cryptocurrency markets. This sparked a massive sale of Bitcoin, Ethereum, Tether, and other major cryptocurrencies in May last year.

Interpol later issued an international red notice after the US Securities and Exchange Commission (SEC) accused him of failing to fully disclose his crypto assets. The agency also stated he had misled holders and investors of stablecoin TerraUSD.

The US Securities and Exchange Commission (SEC) has informed Coinbase Global Inc that it could face civil action for several of its products.

News of the potential legal action tumbled Coinbase shares to $68.18, down 12 percent from before.

According to a Wells notice, SEC authorities were set to launch enforcement actions against Coinbase. Despite this, it did not indicate the regulatory agency would file charges or initiate penalties.

Coinbase products such as Coinbase Earn, Coinbase Prime, and Coinbase Wallet, and other spot market products would be targeted, the SEC continued.

Brian Armstrong, Coinbase CEO, hit back at the Wells notice in a statement: “Going forward the legal process will provide an open and public forum before an unbiased body where we will be able to make clear for all to see that the SEC simply has not been fair, reasonable, or even demonstrated a seriousness of purpose when it comes to its engagement on digital assets.”

The SEC and the New York Attorney General have targeted several key cryptocurrency exchanges, including KuCoin, Coinbase, CoinEx, and many others. Many currency exchanges have faced lawsuits due to allegedly trading unregistered securities.

US regulators have slapped eIght celebrities with charges for operating an illegal cryptocurrency trading scheme.

In a Securities and Exchange Commission (SEC) press release, stars such as rapper Soulja Boy, actress Lindsay Lohan, and others face charges. According to the statement, they allegedly failed to disclose to social media followers they had been paid to promote TRX and BTT cryptocurrencies.

According to reports, Lohan and boxing superstar Jake Paul have agreed on a settlement.

Additional celebrities involved in the scandal include singer Austin Mahone, rapper Lil’ Yachty, singer Akon, porn actress Kendra Lust, and hip-hop artist Ne-Yo.

The SEC stated: “[It] charged the following eight celebrities for illegally touting TRX and/or BTT without disclosing that they were compensated for doing so and the amount of their compensation.”

SEC authorities also charged cryptocurrency investor Justin Sun with fraud for allegedly manipulating trading for two tokens.

The statement continued: [Sun is accused of] “orchestrating a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweet.”

It also charges Sun’s companies Tron Foundation Ltd, BitTorrent Foundation Ltd, and Rainberry Inc.

Regulators Crack Down on Superstar Crypto Scheme

SEC chair Gary Gensler said the case demonstrated the “high risk investors face when crypto asset securities are offered and sold without proper disclosure.”

He added: “As alleged, Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, generating millions in illegal proceeds at the expense of investors, but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX.

It also accused Sun of convincing investors to buy TRX and BTT with the promotional campaign, according to Gurbir S Grewal, SEC Director of Division of Enforcement.

He concluded: “As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities.”

Lohan has paid the SEC $10,000, with an additional $30,000 in fines. Paul has paid over $100,000. The eight people, excluding Soulja Boy and Mahone, have paid a total of over $400,000 in settlements.

A row over forced arbitrations should temporarily pause courts until debates are resolved, Coinbase has told the United States Supreme Court on Tuesday.

According to reports, the case is not directly linked to cryptocurrencies but could affect cryptocurrency exchanges in disputes with customers.

The case could set a precedent for customers to settle their disputes in courtrooms rather than through channels provided by user agreements.

Neal Katyal, a lawyer for Coinbase, said that “Congress did something very unusual” after it allowed customers to respond to denied forced arbitration by appealing court cases.

He added courts should have a “background rule” to outline that appeal laws did not allow courts to continue when triggered.

Allowing customers to proceed with cases, leading to the exchange of evidence and data, companies could be “coerced into a massive settlement” due to information leaked to the public and press.

He added: “That toothpaste can’t later be put back into the tube.”

But Hassan Zavareei, Bielski’s lawyer, responded: “The entire cryptocurrency market is collapsing under our feet.” He also stated that compulsory delays from companies could block people from pursuing court cases against businesses during the appeal process.

The case, Coinbase Inc v Bielski, Abraham Bielski accused Coinbase of weak protections after a cybercriminal stole $31,000 from his account. Courts approved he could file his complaint and launch a court case, sparking outcry from Coinbase.

Coinbase’s user agreement resolves disputes via the Federal Arbitration Act, which outlines proceedings for resolving disputes. Action in trial courts are forced to pause following appeal denials of compulsory arbitrations.

Cryptocurrency exchange platform OKCoin suspended trading of its MiamiCoin and NYCCoin on Thursday last week, citing liquidity issues first noted in January.

In a blog post, it wrote: “Limited liquidity for these coins on our platform has created the possibility of price manipulation and fraudulent activity. While none of these risks have occurred, we wanted to get ahead of any possible misconduct.”

The company added: “The concern with low liquidity is that malicious, third party actors can manipulate prices, launder stolen funds, and perpetrate other frauds. While none of these risks have occurred, we wanted to get ahead of any possible misconduct. So we moved immediately to address and stop these events from occurring.”

OKCoin plans to resume trading the coins after resolving their “unexpected” low liquidity issues. Those holding the digital assets can keep them on OKCoin or transfer them to decentralised wallets.

The San Francisco-based cryptocurrency exchange is the only citycoin provider, it added. The assets allow citizens to build cryptocurrency wealth via their resident cities.