Author: Reuters

MOSCOW (Reuters) – Russian lender VTB’s VTB Factoring subsidiary and fintech company Lighthouse have executed the country’s first cash-backed digital financial asset transaction, the bank said on Wednesday.

In February blockchain platform Atomyze Russia was legally permitted to exchange digital assets in a country whose central bank has long voiced scepticism of cryptocurrencies, citing financial stability concerns and advocating for a complete ban on trading.

Lighthouse and Russia’s top lender Sberbank are the only other companies with such a licence.

VTB said the transaction was similar to the issue of short-term commercial bonds. Here, the debt pool of the issuer, in this case engineering company Metrowagonmash, was tokenised on Lighthouse’s platform and purchased by VTB Factoring.

“In this way, the first issue and placement of digital financial assets secured by cash was made,” VTB said.

Ten thousand tokens were issued at a price of 500 roubles ($9.87) per token, issuing documents showed.

“The new technology of financing commercial debt significantly eases access to capital for Russian business,” said VTB Factoring CEO Anton Musatov.

Russian lawmakers on Tuesday approved a draft law that would potentially exempt issuers of digital assets and cryptocurrencies from value-added tax.

($1 = 50.6500 roubles)

(Reporting by Reuters, Editing by Louise Heavens)

TAIPEI (Reuters) – Taiwan’s central bank is still working on its digital currency and while it’s unclear when the scheme could roll out to the public it will push ahead with it, governor Yang Chin-long said on Wednesday.

Taiwan’s central bank has been working on a pilot for a government-run digital currency for the past two years, to allow people to use a digital wallet and make payments without using a debit or credit card.

Speaking at a forum on digital currencies, Yang said they have been simulating the use of the central bank digital currency, or CBDC, in a closed loop environment.

The central bank faces three major tasks next, he added: communicating with the public and winning their support, ensuring the system’s stability, and building the legal framework for the currency’s operations.

“This will take a long time, at least two years, and then we’ll have to evaluate it again.”

As this is a huge project, it’s uncertain that even in two years’ time the CBDC platform can be completed, Yang said.

Taiwanese people are also accustomed to using cash, he added.

“We still have to push forward. After all, most of the young people in the future will use mobile phones, so we have to think about the next generation.”

Ten countries have already launched central bank digital currencies and another 105 countries are exploring the option, according to the Atlantic Council.

U.S. Federal Reserve Chairman Jerome Powell said earlier this month that the development of an official digital version of the dollar could help safeguard its global dominance as other countries issue their own.

(Reporting by Liang-sa Loh; Writing by Ben Blanchard; Editing by Sam Holmes)

By Josh Smith

SEOUL (Reuters) – The nosedive in cryptocurrency markets has wiped out millions of dollars in funds stolen by North Korean hackers, four digital investigators say, threatening a key source of funding for the sanctions-stricken country and its weapons programmes.

North Korea has poured resources into stealing cryptocurrencies in recent years, making it a potent hacking threat and leading to one of the largest cryptocurrency heists on record in March, in which almost $615 million was stolen, according to the U.S. Treasury.

The sudden plunge in crypto values, which started in May amid a broader economic slowdown, complicates Pyongyang’s ability to cash in on that and other heists, and may affect how it plans to fund its weapons programmes, two South Korean government sources said. The sources declined to be named because of the sensitivity of the matter.

It comes as North Korea tests a record number of missiles – which the Korea Institute for Defense Analyses in Seoul estimates have cost as much as $620 million so far this year – and prepares to resume nuclear testing amid an economic crisis.

Old, unlaundered North Korean crypto holdings monitored by the New York-based blockchain analytics firm Chainalysis, which include funds stolen in 49 hacks from 2017 to 2021, have decreased in value from $170 million to $65 million since the beginning of the year, the company told Reuters.

One of North Korea’s cryptocurrency caches from a 2021 heist, which had been worth tens of millions of dollars, has lost 80% to 85% of its value in the last few weeks and is now worth less than $10 million, said Nick Carlsen, an analyst with TRM Labs, another U.S.-based blockchain analysis firm.

A person who answered the phone at the North Korean embassy in London said he could not comment on the crash because allegations of cryptocurrency hacking are “totally fake news.”

“We didn’t do anything,” said the person, who would only identify himself as an embassy diplomat. North Korea’s foreign ministry has called such allegations U.S. propaganda.

The $615 million March attack on blockchain project Ronin, which powers the popular online game Axie Infinity, was the work of a North Korean hacking operation dubbed the Lazarus Group, U.S. authorities say.

Carlsen told Reuters that the interconnected price movements of different assets involved in the hack made it difficult to estimate how much North Korea managed to keep from that heist.

If the same attack happened today, the Ether currency stolen would be worth a bit more than $230 million, but North Korea swapped nearly all of that for Bitcoin, which has had separate price movements, he said.

“Needless to say, the North Koreans have lost a lot of value, on paper,” Carlsen said. “But even at depressed prices, this is still a huge haul.”

The United States says Lazarus is controlled by the Reconnaissance General Bureau, North Korea’s primary intelligence bureau. It has been accused of involvement in the “WannaCry” ransomware attacks, hacking of international banks and customer accounts, and the 2014 cyber-attacks on Sony Pictures Entertainment.

Analysts are reluctant to provide details about what types of cryptocurrency North Korea holds, which might give away investigation methods. Chainalysis said that Ether, a common cryptocurrency linked to the open-source blockchain platform Ethereum, was 58%, or about $230 million, of the $400 million stolen in 2021.

Chainalysis and TRM Labs use publicly available blockchain data to trace transactions and identify potential crimes. Such work has been cited by sanctions monitors, and according to public contracting records, both firms work with U.S. government agencies, including the IRS, FBI and DEA.

North Korea is under widespread international sanctions over its nuclear programme, giving it limited access to global trade or other sources of income and making crypto heists attractive, the investigators say.

‘FUNDAMENTAL’ to NUCLEAR PROGRAMME

Although cryptocurrencies are estimated to be only a small portion of North Korea’s finances, Eric Penton-Voak, a coordinator of the United Nations panel of experts that monitors sanctions, said at an event in April in Washington, D.C., that cyberattacks have become “absolutely fundamental” to Pyongyang’s ability to evade sanctions and raise money for its nuclear and missile programmes.

In 2019, sanctions monitors reported that North Korea had generated an estimated $2 billion for its weapons of mass destruction programmes using cyberattacks.

One estimate from the Geneva-based International Campaign to Abolish Nuclear Weapons says North Korea spends about $640 million per year on its nuclear arsenal. The country’s gross domestic product was estimated in 2020 to be around $27.4 billion, according to South Korea’s central bank.

Official sources of revenue for Pyongyang are more limited than ever under self-imposed border lockdowns to combat COVID-19. China – its biggest commercial partner – said in 2021 that it had imported just over $58 million in goods from North Korea, amid some of the lowest level of official bilateral trade in decades. Official numbers do not include smuggling.

North Korea already only gets a fraction of what it steals because it must use brokers willing to convert or buy cryptocurrencies with no questions asked, said Aaron Arnold of the RUSI think-tank in London. A February report by the Center for a New American Security (CNAS) estimated that in some transactions, North Korea only gets one-third of the value of the currency it has stolen.

After obtaining cryptocurrency in a heist, North Korea sometimes converts it to Bitcoin, then finds brokers who will buy it at a discount in exchange for cash, which is often held outside the country.

“Much like selling a stolen Van Gogh, you’re not going to get fair market value,” Arnold said.

CONVERTING TO CASH

The CNAS report found that North Korean hackers exhibit only “moderate” concern over hiding their role, compared to many other attackers. That allows investigators to sometimes follow digital trails and attribute attacks to North Korea, though rarely in time to recover the stolen funds.

According to Chainalysis, North Korea has turned to sophisticated ways of laundering stolen cryptocurrency, increasing its use of software tools that pool and scramble cryptocurrencies from thousands of electronic addresses – a designator for a digital storage location.

The contents of a given address are often publicly viewable, allowing firms such as Chainalysis or TRM to monitor any that investigations have linked to North Korea.

Attackers have tricked people into giving access or hacked around security to siphon digital funds out of internet-connected wallets into North Korea-controlled addresses, Chainalysis said in a report this year.

The sheer size of recent hacks has strained North Korea’s capacity to convert cryptocurrency to cash as quickly as in the past, Carlsen said. That means some funds have been stuck even as their value drops.

Bitcoin has lost about 54% of its value this year and smaller coins have also been hit hard, mirroring a slide in equities prices linked to investor concerns about rising interest rates and the growing likelihood of a global recession.

“Converting to cash remains a key requirement for North Korea if they want to use the stolen funds,” said Carlsen, who investigated North Korea as an analyst at the FBI. “Most of the commodities or products the North Koreans want to buy are only traded in USD or other fiat, not cryptocurrencies.”

Pyongyang has other, larger sources of funding that it can rely on, Arnold said. U.N. sanctions monitors have said as recently as December 2021 that North Korea continues to smuggle coal – usually to China – and other major exports banned under Security Council resolutions.

VOLATILE CURRENCIES

North Korean hackers sometimes appear to wait out rapid dips in the value or exchange rates before converting to cash, said Jason Bartlett, the author of the CNAS report.

“This sometimes backfires as there is little certainty in predicting when the value of a coin will rapidly increase and there are several cases of highly depreciated crypto funds just sitting in North Korea-linked wallets,” he said.

Sectrio, the cybersecurity division of Indian software firm Subex, said there are signs North Korea has begun ramping up attacks on conventional banks again rather than cryptocurrencies in recent months.

The firm’s banking sector-focused “honeypots” – decoy computer systems intended to attract cyberattacks – have seen an increase in “anomalous activities” since the crypto crash, as well as an increase in “phishing” emails, which try to fool recipients into giving away security information, Sectrio said in a report last week.

But Chainalysis said it had yet to see a major change in North Korea’s crypto behaviour, and few analysts expect North Korea to give up on digital currency heists.

“Pyongyang has added cryptocurrency into its sanctions evasion and money laundering calculus and this will likely remain a permanent target,” Bartlett said.

(Reporting by Josh Smith. Editing by Gerry Doyle)

By Manya Saini, John McCrank and Krystal Hu

(Reuters) – Sam Bankman-Fried’s FTX crypto exchange said it is not in talks to acquire Robinhood Markets Inc, after a report https://www.bloomberg.com/news/articles/2022-06-27/sam-bankman-fried-s-ftx-seeking-to-buy-robinhood-hood on Monday claimed the exchange was exploring such a deal.

Bloomberg News reported on Monday FTX was discussing internally how to buy the app-based brokerage and that Robinhood had not received a formal takeover approach, citing people with knowledge of the matter.

“There are no active M&A conversations with Robinhood,” Bankman-Fried said in an emailed statement.”We are excited about Robinhood’s business prospects and potential ways we could partner with them.”

Robinhood declined to comment. The retail-trading platform’s shares were down 5% in extended trading after jumping over 14% on the report.

Last month, the founder and chief executive of FTX revealed a 7.6% stake in Robinhood but said he did not have any intention of taking control of the retail-trading platform.

Robinhood’s dual-class shares give its founders control of 64% of the voting shares outstanding, making it virtually impossible for takeovers without their support.

The popular trading platform has come under pressure this year as trading volumes ease from 2021’s frenetic pace – when retail investors used it to pump money into shares of so-called meme stocks such as GameStop and AMC Entertainment.

That slowdown, along with a sell-off in high-growth technology stocks, has driven a near 50% slump in Robinhood shares this year. The company had a market valuation of nearly $7 billion as of Friday’s closing price.

FTX’s U.S. arm announced in May it would launch a stock trading platform by the end of the summer. Last week, it acquired partner Embedded Financial Technologies for an undisclosed amount, which would add custody, execution and clearing services to its equity trading platform.

FTX and its billionaire founder Bankman-Fried have rescued other players during the crypto market’s recent crash. It provided crypto lender BlockFi with a $250 million revolving credit facility to help the firm avoid a liquidity crunch.

(Reporting by Manya Saini in Bengaluru, John McCrank and Krystal Hu in New York; Editing by Aditya Soni and Richard Chang)

By Gertrude Chavez-Dreyfuss

(Reuters) – Investors in ether and its troubled twin stETH are nervously anticipating a crypto milestone: The merge.

That’s the name for a major upgrade of the Ethereum blockchain network upon which many crypto projects are built, aimed at making it leaner, meaner and cleaner.

It’s elusive. The merge was supposed to happen years ago but has been delayed several times, with developers most recently axing plans to push the button in June, unnerving investors who began to fear it might never see the light of day.

Now though, market players are betting that the end of the waiting is nigh. But it’s no slam dunk.

On Polymarket, a crypto site where users place bets with stablecoins on the occurrence of future events, investors have priced in a 67% chance that the upgrade, also known as Ethereum 2.0, will come to pass by October, and a 13% probability by September.

The Ethereum Foundation, which uses the analogy of changing the engine of a spaceship mid-flight, says on its website that the merge is “shipping” around “Q3/Q4 2022”.

The merge finally happening would prove a big relief for ether, which has slumped on past delays and waning confidence in the upgrade. The second-biggest cryptocurrency was last trading at around $1,200, down from just over $3,500 in April, though much of the recent pessimism about the upgrade has been swamped by wider recent market ructions.

The merge could also represent the end of an ordeal for those investors holding a crypto derivative token called staked ether or stETH, which represents ether locked up in a testing environment for the upgrade, and which is hard to redeem at scale until at least six months after the merge happens.

Yet doubters remain.

“It’s just the sheer mass of the protocol. Ethereum is just so huge that I don’t think they’re going to reach their deadline in time,” said Brent Xu, founder and CEO at Umee, which is building a base-layer blockchain for borrowing and lending.

“People are just scared that their stETH is not going to be worth anything because the Merge is probably going to take longer than expected,” said Xu.

THE STUMBLING OF stETH

The upgrade will see ether mining transition away from the energy-intensive proof-of-work. Ethereum’s existing execution layer will merge with the new proof-of-stake consensus system.

Any further delays would be bad news for those holding stETH, a token created by a crypto project called Lido that can be converted into ether on a 1:1 basis between six and 12 months after the merge happens.

Until then, stETH trades at a price set by the market, with most trades occurring on a trading platform called Curve.

It reached a market cap of $11 billion in May, according to price site CoinGecko, and until last month traded broadly at parity with ether.

However, when crypto markets sold off last month stETH tumbled in value to trade at around an 8% discount to ether, hurt by major selling by investors such as Celsius and Three Arrows according to public data.

The price has recovered a little – stETH currently trades at a 4% discount to ether – but has not made it back to parity, partly because of the impact of the delayed merge.

Major investors in stETH include embattled U.S.-based crypto lender Celsius.

ANY TAKERS FOR THAT TRADE?

The stETH project was popular because while investors can earn interest elsewhere by “staking” their ether, to do so they must lock away a minimum of 32 ether (currently roughly $38,000) until the network upgrades to the new standard.

Lido, instead, allowed them to stake as little ether as they wished in return for yield, and receive stETH.

Yet repeated delays to the merge is testing the nerves of stETH investors.

The concern is that liquidity is fast drying up at Curve, said Ryan Shea, crypto economist at global fintech company Trakx.io. Curve’s stETH liquidity has more than halved since mid May, according to the platform’s data.

“You’re going to have to find alternative sources if you want to sell a huge amount of stETH,” Shea said, such as putting stETH as collateral in another lending protocol.

“But in this type of environment where people are looking closely at crypto lending companies, whether anyone will be prepared to take that trade, I don’t know.”

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Alun John and Pravin Char)

By Lisa Pauline Mattackal and Medha Singh

(Reuters) – Bitcoin miners have been forced to tap into their cryptocurrency stashes as a plunge in prices, rising energy costs and increased competition bite into profitability.

The number of coins miners are sending to crypto exchanges has been steadily climbing since June 7, researchers at MacroHive noted, in a sign that “miners have been increasingly liquidating their coins on exchanges.”

Several publicly listed bitcoin miners collectively sold more than 100% of their entire output in May as the value of bitcoin tumbled 45%, an analysis by Arcane Research https://tmsnrt.rs/3nhYdHA found.

“The plummeting profitability of mining forced these miners to increase their selling rate to more than 100% of their output in May. The conditions have worsened in June, meaning they are likely selling even more,” said Arcane analyst Jaran Mellerud.

Bitcoin sales by public miners https://fingfx.thomsonreuters.com/gfx/mkt/gkplgejyyvb/bitcoin%20mining.JPG

Bitcoin miners, who run networks of computers to earn tokens by validating transactions on the blockchain, are typically staunch crypto “HODLers” and collectively own around 800,000 bitcoins, according to CoinMetrics data.

The crypto mining space rapidly expanded in 2021 as bitcoin more than quadrupled in value, but this growth has further pressured margins as the process is designed to grow more difficult as the number of miners increases.

“Over the past six months, hash rate and mining difficulty have increased while the price of bitcoin has dropped. These are both negatives for existing miners as both work to compress margins,” said Joe Burnett, analyst at bitcoin mining firm Blockware Solutions.

High energy prices are also hitting miners, which by some estimates use more electricity than the Philippines, according to the Cambridge Bitcoin Electricity Consumption Index.

“If you’re not at a very low-cost electricity area at this point, you’ve got to shut down,” noted Chris Brendler, senior research analyst at D.A. Davidson.

Bitfarms, Riot Blockchain and Core Scientific are among companies that announced sales, with Bitfarms’ chief executive officer saying the company is “no longer HODLing daily bitcoin production.”

Shares of publicly listed miners have been battered even more than bitcoin, with the Valkyrie Bitcoin Miners ETF falling 59% this quarter compared to 53% drop for bitcoin.

Some miners, including Bitfarms, are using proceeds to negotiate financing agreements to fund operations and make payments on expensive mining equipment.

If miners have already paid two-thirds or even 70% of the price of these millions of dollars in machines, they wouldn’t want to miss the final installments, which makes them desperate for financing, Brendler said.

Given their significant bitcoin holdings https://tmsnrt.rs/3xUJesg, some analysts point to miner sales as another factor weighing on bitcoin prices.

Valuations and holdings of public bitcoin miners https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnxmrqpq/Pasted%20image%201656347748285.png

LIGHT AT THE END OF THE TUNNEL?

Miners using older and more energy-intensive machines, and without the balance sheet and access to financing of publicly listed players are already struggling.

Bitcoin’s mining difficulty decreased 2.35% this week, Glassnode data showed, indicating the network had adjusted after some miners turned off their rigs.

This takes some pressure off those that have not given up.

“Bitcoin mining is a zero-sum game. If you can continue running when others cannot that means you have a larger share of the pie,” said Charlie Schumacher, spokesperson for the largest publicly listed miner Marathon Digital Holdings Inc.

Marathon has not sold bitcoin since October 2020, he added.

“Bitcoin bottoms have been marked at the end of miner capitulation, that could be a sign that the miners that can survive this capitulation have a light at the end of the tunnel,” Burnett said.

(Reporting by Medha Singh and Lisa Mattackal in Bengaluru; Editing by Lisa Shumaker)

(Reuters) – Celsius Network LLC has hired restructuring consultants from advisory firm Alvarez & Marsal to advise on a possible bankruptcy filing, the Wall Street Journal reported https://www.wsj.com/amp/articles/celsius-network-taps-more-advisers-to-prepare-for-potential-bankruptcy-11656088078?mod=Searchresults_pos1&page=1 on Friday, citing people familiar with the matter.

The New Jersey-based cryptocurrency lending company froze withdrawals and transfers earlier this month due to “extreme” market conditions, in the latest sign of the financial market downturn hitting the cryptosphere.

A separate report from CoinDesk said https://www.coindesk.com/business/2022/06/24/goldman-sachs-raising-funds-to-buy-celsius-assets-sources on Friday that Wall Street bank Goldman Sachs was looking to raise $2 billion from investors to buy distressed assets from Celsius.

The proposed deal would allow investors to buy the assets at potentially big discounts if the cryptocurrency lender files for bankruptcy, according to the report, which cited two people familiar with the matter.

Celsius had $11.8 billion in assets as of last month. The company and Alvarez & Marsal did not immediately respond to Reuters requests for comment.

The market for digital assets has in recent months been roiled by extreme volatility as investors dump risky assets on fears that aggressive interest rate hikes to tame stubborn inflation could plunge the economy into recession.

(Reporting by Manya Saini in Bengaluru; Editing by Aditya Soni)

By Jody Godoy

(Reuters) – A downturn in cryptocurrency prices and crash of one stablecoin has led some investors to try to recover their losses in U.S. court. Here is how cryptocurrency litigation has fared so far and the challenges investors may face.

WHO IS BEING SUED?

Companies that created cryptocurrencies, exchanges that facilitated their sale, and individuals who promoted them have all been sued.

Kyle Roche, who represents cryptocurrency holders in several lawsuits, said U.S. claims over cryptocurrency often involve alleged violations of federal securities or commodities laws, which prohibit fraud and manipulation and require products and operators to be registered with U.S. authorities.

The latest lawsuit took aim at Terraform Labs, the company behind Terra USD, over the stablecoin’s recent collapse.

A crytocurrency investor sued the Seoul-based company and its Chief Executive Do Kwon on June 17, alleging they failed to register the company’s digital assets as securities and worked with several venture capital funds that backed Terra USD to defraud investors.

A Terraform Labs spokesperson called the claims meritless.

Tether, which is behind the world’s largest stablecoin, has been accused of rigging cryptocurrency markets in a lawsuit in New York. And Ripple, whose founders created the token XRP, has been hit with a lawsuit in California, claiming it sold unregistered securities.

Both lawsuits have survived motions to dismiss.

A spokesperson said Ripple disputes the allegations and will defend against them. Tether did not respond to a request for comment.

Cryptocurrency exchanges have been another target for investors seeking to recoup losses.

Binance U.S. was sued on June 13 by investors claiming it falsely marketed TerraUSD as a safe asset ahead of its collapse. And in March, investors accused Coinbase of selling 79 digital assets as unregistered securities.

Binance and Coinbase have denied the allegations.

Investors are also suing celebrities who have publicly touted cryptocurrency. A lawsuit filed in Los Angeles claims Reality TV star Kim Kardashian and boxing legend Floyd Mayweather Jr. engaged in a cryptocurrency pump and dump. Representatives for Kardashian and Mayweather did not respond to requests for comment.

LEGAL HURDLES

A wave of lawsuits brought in 2020 against exchanges alleging they fueled an illegal boom in digital coins largely failed after judges found some of the claims were filed too late or had too little connection to the United States.

Timing should not be an issue for newer lawsuits, but cryptocurrency holders seeking to sue overseas companies in U.S. court could still face hurdles.

Token holders won a default judgment in New York against Singapore-based exchange KuCoin, but dropped the case after a Singaporean court would not make the company provide information to enforce the judgment.

KuCoin did not respond to a request for comment.

Another potential hurdle for investors filing claims under securities or commodities laws will be showing their tokens meet the legal definition of those assets. Some courts have ruled that certain cryptocurrencies fit the bill, but the issue remains unsettled.

Cryptocurrency holders may face additional obstacles when going after exchanges. In the Coinbase lawsuit, the exchange has argued that it was not a party to the transactions, and that private litigants cannot enforce registration requirements.

HAVE ANY CRYPTO HOLDERS WON MONEY IN COURT?

While many cryptocurrency lawsuits are pending, the SEC has reclaimed some funds for investors in a handful of digital assets through settlements.

But even after a settlement, investors may face long waits and still end up with less than they shelled out.

Last year, blockchain company Block.one agreed to pay $27.5 million to settle token holders’ lawsuit alleging it had violated securities law.

More than 100 token holders filed claims worth more than $75.7 million, according to court filings. The settlement has not yet received final approval.

(Reporting by Jody Godoy; Editing by Noeleen Walder and Richard Chang)

By Alexandra Alper and David Shepardson

WASHINGTON (Reuters) – A bipartisan group of U.S. senators plans to introduce legislation on Thursday that would give the Biden administration the power to block exports of U.S. personal data to countries like China that they say pose national security risks.

    The bill, cosponsored by Finance Committee chair Ron Wyden, a Democrat, and Marco Rubio, the top Republican on the U.S. Senate Intelligence Committee, aims to protect Americans’ sensitive personal information from being sold or transferred to high-risk foreign countries.

“Right now it’s perfectly legal for a company in China to buy huge databases of sensitive information from data brokers about the movements or health records of millions of Americans, and then share that information with the Chinese government,” Wyden said in a statement announcing the legislation. “That’s a huge problem for our country’s security.”

The bill, which is modeled on a discussion draft released by Wyden last year, would direct the Secretary of Commerce to identify categories of personal data that, if exported, could harm U.S. national security.

If approved, the bill would also direct the Commerce Department to require licenses for bulk exports of the identified categories of personal data to other countries, and deny exports to high-risk countries. Data exports to low-risk countries would be unrestricted, according to a summary of the bill.

While the bill does not specifically list China as a high- risk country, it is an intended target according to a Wyden aide. The Chinese Embassy in Washington did not immediately comment.

Other cosponsors include senators Cynthia Lummis, Sheldon Whitehouse and Bill Hagerty.

The move comes amid heightened scrutiny of U.S. data flows to China. Last month, Reuters reported that the Biden administration had drafted an executive order that would give the Justice Department vast powers to stop foreign adversaries like China from accessing Americans’ personal data.

(Reporting by Alexandra Alper and David Shepardson in Washington; Editing by Matthew Lewis)

LONDON (Reuters) – Britain’s worsening cost-of-living squeeze is pushing some people into gambling and cryptocurrency investments in last-ditch attempts to make ends meet, a gambling charity warned on Thursday.

GamCare said it had increasingly received calls from people receiving state welfare payments who had gambled in the hope they could cover soaring energy and food bills, and lost.

The charity reported that some people who it had helped successfully in the past had relapsed into gambling again under the growing financial pressure.

British households are grappling with the highest rate of inflation out of the Group of Seven advanced economies, which hit a new 40-year high of 9.1% in May. The Bank of England has warned of inflation exceeding 11% by October.

A YouGov survey of more than 4,000 people commissioned by GamCare and published on Thursday showed 46% were worried about their financial situation.

More than half of those polled said they had gambled over the past 12 months, and most of this group had lost money.

“Our helpline advisers are hearing that the cost of living is impacting people’s gambling behaviours – particularly those gamblers who have recovered,” said Anna Hemmings, chief executive of GamCare.

“We also know that our team are hearing from more and more people who are reaching out for help around crypto trading.”

Someone who paid in sterling to invest in Bitcoin six months ago to help hedge against the rising cost of living would have lost 55% of their investment as of Thursday.

GamCare said 43% of problem gamblers had invested in cryptocurrency, and 25% out of this group said they wanted to invest more to chase losses – compared with only 7% of the wider population of crypto investors.

(Reporting by Andy Bruce, Editing by Kylie MacLellan)

By Sheila Dang

(Reuters) – One by one, over the last week of May, Twitter Inc rang up some members of its incoming class of new hires who had recently graduated from college and revoked the job offers in 15-minute calls, according to some of the recipients.

“It was traumatic,” Iris Guo, an incoming associate product manager living in Toronto, told Reuters. She received the bad news in a 10:45 p.m. video call that her position had been eliminated. Since then, she has raced to find new employment in order to secure her U.S. work visa.

More than 21,500 tech workers in the United States have lost their jobs so far this year, according to Layoffs.fyi, a website that monitors job cuts. The number of tech layoffs in May alone skyrocketed 780% over the first four months of the year combined, according to outplacement services firm Challenger, Gray & Christmas.

But recent college graduates like Guo, who graduated from the University of Waterloo and studied financial management and computer science, represent a new dimension to the cutbacks as their nascent careers are eliminated even before they begin. The trend reflects a new austerity sweeping across some parts of the tech industry such as crypto and venture capital-backed companies.

For crypto firms, the belt-tightening is due to the recent crash in cryptocurrency prices and venture capital-backed companies are also cutting costs to avoid going back to the market for additional funding, said Kyle Stanford, senior analyst for venture capital at Pitchbook.

Crypto firm Coinbase Global Inc laid off 18% of staff this month, payments firms Klarna and Bolt Financial collectively laid off over 900 people while major names like Meta Platforms Inc, Lyft Inc and Uber Technologies Inc have said they will slow or freeze hiring.

In what appears to be a counter trend to the Great Resignation of 2022, when legions quit for new jobs, some tech job-seekers now face cost cuts and hiring freezes amid four-decade-high inflation, a war raging in Ukraine and the ongoing pandemic.

In the case of those who were poised to join Twitter, the whims of billionaire Elon Musk have also caused stress. Musk has agreed to buy Twitter for $44 billion, but his recent tweets have raised questions about when and if the acquisition will be completed.

To be sure, hiring in the tech sector as a whole has remained strong, according to experts from staffing and consulting firms. Tech roles in the healthcare and finance industries are strong, as well as in the information technology field, said Thomas Vick, a Texas-based regional director for staffing firm Robert Half’s tech practice.

But for the incoming class of new hires out of college, losing their job offers now is especially damaging as they said they are locked out of companies like Meta Platforms, Alphabet Inc’s Google and other tech giants, which have already secured their new cohort of recruits.

Lucas Durrant, an electrical engineering graduate from Canada, was set to start his new job as a software engineer at Bolt last week. While on vacation a few weeks ago, he received an email stating that his offer was rescinded. Bolt announced it would begin layoffs in late May, citing economic conditions.

“It feels a bit like a race against the clock before we see a bigger economic downturn,” said Durrant. “Pretty soon, I’m also going to be competing against people graduating in 2023.”

LIMITED OPTIONS

At least 40 recent college graduates have lost job offers in the past few weeks, according to LinkedIn posts and Google spreadsheets that circulated online to help those affected find new positions.

As of Tuesday, 22 recent grads were listed on a spreadsheet as having offers rescinded from Twitter and nine people were listed on a separate spreadsheet for Coinbase.

In a statement, Twitter said it acknowledged that the rescinded offers could put candidates in a difficult position, and said it is offering compensation to those affected.

Coinbase pointed to a June 2 blog post that said the decision to rescind a number of offers was not made lightly, but was “necessary to ensure we are only growing in the highest-priority areas.”

Chloe Ho, a recent graduate from the University of California, Davis, and who is originally from Hong Kong, has until Sept. 29 to find a new job, or be forced to leave the United States. Ho had accepted a position as a content marketing specialist for an online grocery company called Weee! before the position was rescinded.

As a non-U.S. citizen who needs a new employer to sponsor her work visa, “my options are very limited,” she said.

Ho said she canceled a lease for a new apartment in the San Francisco Bay area, pulled out of vacation plans with friends and will now spend the next three months networking for a new job during the day and submitting applications at night. “I had planned everything around this job,” she said.

Many affected graduates took to LinkedIn to express their disappointment, detail how the rescinded offers upended plans for cross-country moves and ask for referrals to new companies.

Graduates who spoke with Reuters said they were surprised by the level of outreach from people offering to help. Still, the sting of losing their dream jobs has lingered.

One recent college graduate who was set to join Coinbase, and did not want to be named due to his ongoing job hunt, said that just a week before losing his job offer, he had received an email from Coinbase with reassurance that the company did not plan to walk back existing offers.

“I was disappointed for a few reasons. I didn’t think leadership would make that decision,” he said.

While the companies may be saving some money in the short term, they are risking “potentially catastrophic” reputational damage, said Brian Kropp, distinguished vice president of Gartner’s human resources practice.

“Just think about how unfair that is to people you’re rescinding the offer from,” he said. “You’re putting them in a painful situation.”

(Reporting by Sheila Dang in Dallas; Editing by Kenneth Li and Matthew Lewis)

By Elizabeth Howcroft and Tom Wilson

LONDON (Reuters) – Major crypto firm Tether said on Wednesday it will launch next month a “stablecoin” pegged to the British pound, a move that comes as London draws up plans to regulate the fast-growing type of digital currency.

Stablecoins are cryptocurrencies designed to keep a steady value against traditional currencies or commodities such as gold. They seek to avoid the volatility that makes bitcoin and other digital tokens impractical for most commerce.

Crypto markets were rocked last month when the value of terraUSD, a stablecoin that used a complex algorithm, collapsed, throwing a spotlight on the importance of stablecoins to the crypto trading world.

British Virgin Islands-based Tether’s dollar-pegged stablecoin is the third-largest by market capitalisation, with some $68 billion in circulation.

It is the predominant medium for moving funds between crypto and regular cash. Its tokens are underpinned by a mixture of dollars, government debt and short-term debt issued by companies.

As the demise of terraUSD sparked a sell-off in crypto markets, Tether broke its 1:1 peg with the dollar, shaking investors’ faith in a key cog in the crypto economy.

Britain plans to legislate to bring some stablecoins under the oversight of regulators, part of a plan to exploit the potential of crypto and blockchain technology to help consumers make payments more efficiently.

It said in May it will adapt existing rules to deal with major stablecoin collapses.

“We believe that the United Kingdom is the next frontier for blockchain innovation and the wider implementation of cryptocurrency for financial markets,” Tether Chief Technology Officer Paolo Ardoino said in a statement, adding that the company would work with UK regulators.

Britain’s finance ministry did not immediately respond to a request for comment.

In addition to its dollar-backed coin, Tether offers tokens pegged to the euro, offshore Chinese yuan and Mexican peso.

(Reporting by Elizabeth Howcroft and Tom Wilson; Editing by Hugh Lawson)

By Marc Jones

LONDON (Reuters) – Recent implosions in the cryptocurrency markets indicate that long-warned-about dangers of decentralised digital money are now materialising, the Bank for International Settlements has said.

The BIS, the global umbrella body for central banks, sounded the warning in an upcoming annual report, in which it also urged more effort in developing appealing central bank digital currencies.

BIS general manager Agustin Carstens pointed to recent collapses of the TerraUSD and luna ‘stablecoins’, and a 70% slump in bitcoin, the bellwether for the crypto market, as indicators that a structural problem exists.

Without a government-backed authority that can use reserves funded by taxes, any form of money ultimately lacks credibility.”

“I think all these weaknesses that were pointed out before have pretty much materialised,” Carstens told Reuters. “You just cannot defy gravity… At some point you really have to face the music”.

Analysts estimate that the overall value of the crypto market has slumped more that $2 trillion since November as its troubles have snowballed.

Carstens said the meltdown was not expected to cause a systemic crisis in the way that bad loans triggered the global financial crash. But he stressed losses would be sizeable and that the opaque nature of the crypto universe fed uncertainty.

“Based on what we know, it should be quite manageable,” Carstens said. “But, there are a lot of things that we don’t know.”

CENTRAL BANK DIGITAL CURRENCIES (CBDCs)

The BIS is a long-term sceptic of cryptocurrencies and its report laid its vision for the future monetary system – one where central banks utilise the tech benefits of bitcoin and its ilk to create digital versions of their own currencies.

Roughly 90% of monetary authorities are now exploring CBDCs as they are known. Many hope it will equip them for the online world and fend off cryptocurrencies. But the BIS wants to coordinate key issues such as making sure they work across borders.

The immediate challenges are mainly technological, similar to how the mobile phone world needed standardised coding in the 1990s. But there is also the geopolitical issue as relations between the West and countries such as China and Russia wane.

“This (interoperability) is a topic that has been on the G20 agenda for quite some time.. so I think there is a good chance for this to move forward,” Carstens said, adding how there had been a number of “real-life” trials with different CBDCs over the last year.

Asked how long before international standards for CBDC interoperability might be agreed, he said: “I think in the next couple of years. Probably 12 months is too short.”

(Reporting by Marc Jones; Editing by Bernadette Baum)

By Tom Wilson, Elizabeth Howcroft, Nupur Anand and Ece Toksabay

LONDON/MUMBAI/ANKARA (Reuters) – For Jeremy Fong, U.S. crypto lender Celsius was an ideal place to stash his digital currency holdings – and earn some spending money from its double-digit interest rates along the way.

“I was probably earning $100 a week,” at sites like Celsius, said Fong, a 29-year civil aerospace worker who lives in the central English city of Derby. “That covered my groceries.”

Now, though, Fong’s crypto – about a quarter of his portfolio – is stuck at Celsius.

The New Jersey-based crypto lender froze withdrawals for its 1.7 million customers last week, citing “extreme” market conditions, spurring a sell-off that wiped hundreds of billions of dollars from the paper value of the cryptocurrencies globally.

Fong’s long-term crypto holdings are now down about 30%. “Definitely in a very uncomfortable position,” he told Reuters. “My first instinct is just to withdraw everything,” from Celsius, he said.

The Celsius blow-up followed the collapse of two other major tokens last month that shook a crypto sector already under pressure as soaring inflation and rising interest rates prompt a flight from stocks and other higher-risk assets.

Bitcoin fell below $20,000 on June 18 for the first time since December 2020. It has plummeted around 60% this year. The overall crypto market has slumped to around $900 billion, down from a record $3 trillion in November.

The tumble has left individual investors across the world bruised and bewildered. Many are angry at Celsius. Others swear never to invest in crypto again. Some, like Fong, want stronger oversight of the freewheeling sector.

Susannah Streeter, an analyst at Hargreaves Lansdown, compared the turmoil to dotcom stocks crash in the early 2000s – with technology and low-cost capital making it easy for individual investors to gain access to crypto.

“We’ve got this collision of smartphone technology, trading apps, cheap money and a highly speculative asset,” she said. “That’s why you’ve seen a meteoric rise and fall.”

Graphic: Crumbling Crypto – https://graphics.reuters.com/FINTECH-CRYPTO/jnpweoxxxpw/chart.png

‘PACING IN THE DARK AT 2 A.M.’

Crypto lenders, such as Celsius, offer high interest rates to investors – mostly individuals – who deposit their coins with these sites. These lenders, mostly unregulated, then invest deposits in the wholesale crypto market.

Celsius’ troubles appear to be related to its wholesale crypto investments. As these investments turned sour the company was unable to meet client redemptions from investors amid the broader crypto market slump.

The redemption freeze at Celsius was akin to a small bank shutting its doors. But a traditional bank, overseen by regulators, would have some form of protection for depositors.

One of those impacted by the Celsius freeze was 38-year old Alisha Gee in Pennsylvania.

Gee invested “every last bit” of her paycheques in crypto since 2018, which have built up into a five-figure sum. She has $30,000 of deposits at Celsius – part of her overall crypto holdings – earning her interest of $40-$100 a week, which she hoped would help her to pay off her mortgage.

Just over a week ago, Gee got an email from Celsius saying she couldn’t make withdrawals. “I just was pacing in the dark at 2 a.m., just back and forth,” she said.

“I believed in the company,” Gee said. “It doesn’t feel good to lose $30,000, especially that I could’ve put towards my mortgage.”

Gee said she would continue to use Celsius, saying she was “loyal” to the company and hadn’t experienced problems before.

Celsius CEO Alex Mashinsky tweeted on June 15 the company was “working non-stop,” but has given few details of how or when withdrawals would resume. Celsius said on Monday it was aiming to “stabilize our liquidity and operations.”

GUARDRAILS

For some, enthusiasm for crypto is undimmed.

“I have seen multiple bear market cycles by now, so I am avoiding any knee-jerk reaction,” said 23-year old Sumnesh Salodkar in Mumbai, whose crypto holdings are down but still in positive territory.

For others, warnings from regulators across the world about the risks of dabbling in crypto have become reality.

Halil Ibrahim Gocer, a 21-year old in the Turkish capital Ankara, said his father’s crypto investments of $5,000 have tumbled to $600 since he introduced him to crypto.

“Knowledge can only take you so far in crypto,” said Gocer. “Luck is what matters.”

Another investor, a 32-year old IT worker in Mumbai, said he poured three-quarters of his savings – several hundred dollars – into crypto. Its value has plummeted by around 70%-80%.

“This will be my last investment in cryptocurrencies,” he said, requesting anonymity.

Regulators in countries around the world have been working out how to build crypto guardrails that can protect investors and dampen risks to wider financial stability.

The crypto market turmoil sparked by Celsius highlights the “urgent need” for crypto rules, a U.S. Treasury official said last week.

Fong, the UK investor who has lost access to his crypto at Celsius, wants things to change.

“A bit of regulation would be good, essentially. But then I think it’s a balance,” he said. “If you do not want too much regulation, this is what you get” he said.

(Reporting by Tom Wilson and Elizabeth Howcroft in London, Nupur Anand in Mumbai, and Ece Toksabay in Ankara. Editing by Jane Merriman)

By Lisa Pauline Mattackal and Medha Singh

(Reuters) – Crypto lending may not be down and out, but it’s certainly on the ropes.

Crypto lenders have boomed over the past two years, attracting tens of billions of dollars in bitcoin, ether and other coins which they in turn lent out or invested, often in decentralized finance (DeFi) projects with sky-high returns.

But as crypto markets tumble, DeFi activity is being hit particularly hard, robbing lenders of their most lucrative returns and threatening to squeeze the whole sector – reaching far beyond Celsius Network, which grabbed the headlines last week when it froze withdrawals and transfers.

The total value locked (TVL) on ethereum, a metric that attempts to track the value of tokens deposited in a variety of DeFi protocols, has declined by $124 billion or 60% over the last six weeks, according to data provider Glassnode.

The crash has occurred in two large crypto slices, $94 billion lost during the collapse of the LUNA project – involving failed stablecoin TerraUSD – and another $30 billion in mid-June, said Glassnode, which attributed the falls to diminishing risk appetite.

“The current market conditions have put an enormous amount of pressure on operators that interact with decentralized finance protocols to generate their yield,” said Mauricio Di Bartolomeo, co-founder and chief strategy officer of crypto lender Ledn.

BITCOIN VS ETHER VS DOLLAR

Similarly, an index tracking crypto tokens linked to DeFi lending/borrowing protocols and exchanges, from research firm Macrohive, plunged 35% last week as investors pulled money from the formerly high-flying sector.

Some DeFi protocols, or projects, are starting to offer lower returns, with average lending and borrowing rates at one platform, Compound, down on the week across all but one cryptocurrency, the stablecoin Pax Dollar, Macrohive found.

In a further sign of the slowdown, ether – the token that underpins the ethereum network on which many DeFi protocols operate – last week dropped to its lowest level against larger peer bitcoin in 14 months

Versus the dollar, bitcoin has fallen 34% so far in June, while ether has lost over 40%.

The turmoil in this higher yielding part of the crypto market raises questions about the sustainability of the high interest rates crypto lenders offer to their customers, often in double digits.

TOO GOOD TO BE TRUE?

Some market players say crypto lenders should make clients aware of the risks of projects their money is pumped into.

“I expect users to demand more transparency if their assets are managed in DeFi space,” said Iakov Levin, CEO of crypto investment platform Midas Investments. “Crypto needs to find a more transparent model of retail yields.”

New Jersey-based Celsius, with over $11 billion of assets on its platform, cited market volatility when it suspended redemptions last week. A data trawl shows that it was invested in several DeFi projects that ran into difficulties.

“The DeFi market will no doubt suffer from this development because it also deals with cryptocurrencies and people will be more wary than ever about investing their assets in what they perceive as similar ecosystems,” said Yubo Ruan, founder and CEO of Parallel Finance, a decentralized lending protocol.

Ruan said if projects “promise rewards that sound too good to be true – there’s always a chance that they are”.

GRAPHIC: Crypto lending rates (https://graphics.reuters.com/FINTECH-CRYPTO/mopanrlwmva/)

(Reporting by Medha Singh and Lisa Mattackal in Bengaluru; Editing by Alun John and Pravin Char)

(Reuters) – Babel Finance, the Hong Kong-based crypto lender which suspended withdrawals and redemption of crypto assets on Friday, said it has reached an agreement with counterparties on the repayment of some debts to ease short-term liquidity.

Cryptocurrency valuations have plunged in recent weeks as investors dump risky assets in a rising interest rate environment. Bitcoin BTC=BTSP, which reached a record high of $69,000 in November, lost more than half its value this year.

In an update on its website on Monday, Babel said it carried out an emergency assessment of its business operations to determine the company’s liquidity status.

Crypto lenders gather crypto deposits from retail customers and re-invest them, proclaiming double-digit returns and attracting tens of billions of dollars in assets. However, lenders have been unable to redeem their clients’ assets during the recent meltdown.

“Babel Finance will actively fulfill its legal responsibilities to customers and strive to avoid further transmission and diffusion of liquidity risks,” the company said.

Babel, which has 500 clients and only deals in bitcoin, ethereum and stablecoins, raised $80 million in a funding round last month, valuing it at $2 billion. It had ended last year with $3 billion of loan balances on its balance sheet.

(Reporting by Akriti Sharma in Bengaluru; Editing by Richard Chang)

(Reuters) – A Moscow court on Monday rejected an appeal brought by Meta Platforms Inc after it was found guilty of “extremist activity” in Russia, the TASS news agency reported.

Russia in March found Meta guilty of “extremist activity”, but said the ruling would not affect its WhatsApp messenger service, focusing on the U.S. firm’s already-banned Facebook and Instagram social networks.

Meta did not immediately respond to an emailed request for comment.

(Reporting by Reuters; editing by David Evans)

By Alun John and Elizabeth Howcroft

LONDON/HONG KONG (Reuters) – The cryptocurrency industry was on edge on Monday as bitcoin struggled to stay above a key level, with investors fearing that problems at major crypto players could unleash a wider market shakeout.

Bitcoin, the world’s biggest cryptocurrency, was trading just under the symbolic level of $20,000 in early London trading hours – roughly the peak of its charge to its previous record in 2017.

Bitcoin had dropped on Saturday to as low as $17,592.78, falling below $20,000 for the first time since December 2020. It has lost almost 60% of its value this year and 37% this month alone in the cryptocurrency sector’s latest meltdown.

Its fall follows problems at several major industry players. Further declines, market players said, could have a knock-on effect as other crypto investors are forced to sell their holdings to meet margin calls and cover losses.

Crypto hedge fund Three Arrows Capital is exploring options including the sale of assets and a bailout by another firm, its founders told the Wall Street Journal in a story published Friday, the same day Asia-focused crypto lender Babel Finance said it would suspend withdrawals.[nL4N2Y42I2]

U.S. based lender Celsius Network this month said it would suspend customer withdrawals. In a blog on Monday https://blog.celsius.network/a-note-to-the-celsius-community-e5af1f5a7998, Celsius said it would continue working with regulators and officials, but that it would pause its customer Q&A sessions.

“There is a lot of credit being withdrawn from the system and if lenders have to absorb losses from Celsius and Three Arrows, they will reduce the size of their future loan books which means that the entire amount of credit available in the crypto ecosystem is much reduced,” said Adam Farthing, chief risk office for Japan at crypto liquidity provider B2C2.

“It feels very like 2008 to me in terms of how there could be a domino effect of bankruptcies and liquidations,” Farthing said.

Smaller tokens, which usually move in tandem with bitcoin, were also hurt. No.2 token ether was at $1,0752, having dipped below its own symbolic level of $1,000 over the weekend.

The fall in crypto markets has coincided with a slide for equities, as U.S. stocks suffered their biggest weekly percentage decline in two years on fears of rising interest rates and the growing likelihood of recession. [MKTS/GLOB]

Bitcoin’s moves have tended to follow a similar pattern to other risk assets such as tech stocks.

The overall crypto market capitalisation is roughly $877 billion, according to price site Coinmarketcap, down from a peak of $2.9 trillion in November 2021.

A fall in stablecoins – a type of crypto designed to hold a steady value – is also suggesting investors are pulling money from the sector as a whole.

Graphic: Bitcoin so far in 2022 – https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwbwqapo/Bitcoin%20so%20far%20in%202022.png

(Reporting by Alun John, Editing by Shri Navaratnam and Ed Osmond)

By Tina Bellon

(Reuters) – Bitcoin on Sunday rose around 7.6% to $20,404 from its previous close, signaling a recovery from a sharp drop on Saturday.

Bitcoin, the world’s biggest and best-known cryptocurrency, is now up 16.7% from this year’s low of $17,592.78 on June 18, when it tumbled on investor worries about growing troubles in the crypto industry and amid a general pull-back from riskier assets.

Andrew Brenner, head of international fixed income at National Alliance Securities, on Sunday said the rise in Bitcoin was likely the result of retail investors buying up the digital currency over the weekend, when few professional traders are working.

“Some buyers think now is a good time to get in because Bitcoin got down to a level which shows some near-term attractiveness,” Brenner said. He added that Bitcoin and other digital currencies remained extremely volatile.

Ether, the coin linked to the ethereum blockchain network, on Sunday rose more than 13% to $1,131 from its previous close on Saturday, which at $993 marked Ether’s lowest price since the beginning of this year.

The sell-off in the crypto market has coincided with an equities slide, as U.S. stocks suffered their biggest weekly percentage decline in two years on fears of rising interest rates and the growing likelihood of a recession.

Brenner said digital currencies were not a good investment at a time when the U.S. Federal Reserve tightens the supply of dollars by ending expansive monetary policy.

“As long as the dollar continues to show strength, digital currencies is not where you want to be,” Brenner said.

(Reporting by Akriti Sharma in Bengaluru and Tina Bellon in Austin, Texas; Editing by Nick Zieminski)

(Reuters) – Bitcoin dropped 6.53% to $19,106.37 at 0734 GMT on Saturday, losing $1,334.33 from its previous close.

Earlier in the day, it sank as far as $19,047.61, its lowest point since December 2020.

Bitcoin is down 59% this year, while ether is down 73%.

(Reporting by Jahnavi Nidumolu in Bengaluru; Editing by Andrew Heavens)