Category: News

By Lananh Nguyen

NEW YORK (Reuters) – Global banking giants are starting a 12-week digital dollar pilot with the Federal Reserve Bank of New York, the participants announced on Tuesday.

Citigroup Inc, HSBC Holdings Plc, Mastercard Inc and Wells Fargo & Co are among the financial companies participating in the experiment alongside the New York Fed’s innovation center, they said in a statement. The project, which is called the regulated liability network, will be conducted in a test environment and use simulated data, the New York Fed said.

The pilot will test how banks using digital dollar tokens in a common database can help speed up payments.

Earlier this month, Michelle Neal, head of the New York Fed’s market’s group, said it sees promise in using a central bank digital dollar to speed up settlement time in currency markets.

(Reporting by Lananh Nguyen; Editing by Chizu Nomiyama)

By Sinéad Carew and Joice Alves

NEW YORK/LONDON (Reuters) – Trading in the dollar and the euro was volatile on Tuesday, with both currencies trading below their session highs as investors tried to interpret reports that stray Russian missiles may have hit NATO member Poland, killing two people.

The euro had lost ground sharply against the safe-haven dollar while equities pared gains after the Poland reports fueled fears that the nine-month war between Russia and Ukraine could escalate.

Firefighters said two people were killed in an explosion in Przewodow, a village in eastern Poland near the border with Ukraine, while a NATO official said the alliance was investigating reports that the blast was from Russian missiles.

But Russia’s defence ministry said “no strikes on targets near the Ukrainian-Polish state border were made by Russian means of destruction”.

Meanwhile, the Pentagon said it could not confirm the reports and the White House said it was working with the Polish government to gather information.

“The market is particularly sensitive now that Ukraine has taken back more territory that Russia had captured after the war began,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

The euro was last up 0.38% at $1.0364 after falling as much as 0.44% following the reports from Poland. The dollar index, which measures the greenback against a basket of major currencies was last down 0.23% after rising as much as 0.42% after the reports out of Poland.

News of the explosions had overshadowed earlier gains in the euro after U.S. economic data suggested easing U.S. inflation.

The U.S. producer price index (PPI) increased 8.0% for the 12 months through October compared with economist expectations for 8.3% and September’s 8.4% increase, according to the Labor Department data.

The data, following last week’s smaller-than-expected increase in consumer prices for October, encouraged investors who have been closely monitoring inflation data for signs that the Federal Reserve could slow its interest rate hikes, which are aimed at dampening soaring prices.

“Risk appetite has improved. That tends to weaken the dollar,” said Karl Schamotta, chief market strategist at payments company, Corpay.

“Fed officials will need to see many months of this before they pause the rate hike cycle but overall price pressures appear to be going in the right direction,” said the strategist who says the dollar likely peaked in September.

Before the U.S. data the euro, sterling and the Swedish crown had already risen sharply against the dollar as traders assessed a slew of economic data, including British and euro zone job figures, plus German economic sentiment.

In Europe traders were also eying encouraging data such as German economic sentiment ZEW index, which rose in November.

Data also showed employment in the single currency area rose in the third quarter.

The dollar index had fallen earlier in the day to a session low of 105.34, its lowest point since August.

The greenback was last down 0.65% against Japan’s yen at 139.025.

Sterling was up 0.95% at $1.1870 after earlier rising as much as 2.27%, which put it at a three-month high against the dollar.

This was ahead of a tough UK government budget plan due out later this week and after data showing Britain’s unemployment rate unexpectedly rose and vacancies fell for a fifth report in a row as employers worried about the economy.

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Currency bid prices at 3:42PM (2042 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.0364 $1.0325 +0.38% -8.84% +$1.0481 +$1.0280

Dollar/Yen 139.0250 139.9250 -0.65% +20.76% +140.6000 +137.6650

Euro/Yen 144.10 144.44 -0.24% +10.57% +145.3600 +143.3600

Dollar/Swiss 0.9430 0.9431 +0.00% +3.39% +0.9474 +0.9357

Sterling/Dollar $1.1870 $1.1760 +0.95% -12.22% +$1.2028 +$1.1745

Dollar/Canadian 1.3268 1.3316 -0.38% +4.92% +1.3335 +1.3226

Aussie/Dollar $0.6772 $0.6702 +1.05% -6.83% +$0.6797 +$0.6686

Euro/Swiss 0.9773 0.9738 +0.36% -5.75% +0.9840 +0.9724

Euro/Sterling 0.8728 0.8783 -0.63% +3.90% +0.8805 +0.8710

NZ $0.6169 $0.6097 +1.24% -9.83% +$0.6203 +$0.6087

Dollar/Dollar

Dollar/Norway 9.9810 10.0310 -0.51% +13.29% +10.0510 +9.8930

Euro/Norway 10.3500 10.3629 -0.12% +3.37% +10.3967 +10.3207

Dollar/Sweden 10.4630 10.4750 +0.24% +16.02% +10.5583 +10.3049

Euro/Sweden 10.8480 10.8221 +0.24% +5.96% +10.8602 +10.7840

(Reporting by Sinéad Carew and Herbert Lash in New York, Joice Alves in London; Editing by Andrew Cawthorne, Angus MacSwan, Andrea Ricci and Alex Richardson)

NEW YORK (Reuters) – The U.S. Securities and Exchange Commission on Tuesday delayed a decision on whether to allow a spot bitcoin exchange-traded fund by stock-picker Cathie Wood’s Ark Invest and crypto investment product firm 21Shares US to list and trade on Cboe Global Markets until Jan. 27.

The delayed decision on the ARK 21Shares Bitcoin ETF follows a series of rejections this year by the market regulator on ETFs that track bitcoin, including proposals from Grayscale, Fidelity, and NYDIG.

(Reporting by John McCrank; editing by Jonathan Oatis)

(Reuters) – Michael Barr, the Federal Reserve’s top financial regulatory official, on Tuesday said he is concerned about risks from the nonbank sector, including cryptocurrencies, for which the U.S. central bank and other regulators have poor visibility.

“We’re concerned about the risks that we don’t know about in the nonbank sector,” Barr said in response to a question during an appearance before the Senate Banking Committee. “That includes obviously crypto activity, but more broadly risks in parts of the financial system where we don’t have good visibility, we don’t have good transparency, we don’t have good data. That can create risks that blow back to the financial system that we do regulate.”

(Reporting By Dan Burns)

By Huw Jones

LONDON (Reuters) – Britain’s Financial Conduct Authority (FCA) on Tuesday called on lawmakers to show their support for its unpopular decision not to grant licences to scores of crypto exchanges like FTX, which has just collapsed.

The FCA has come under pressure as 85% of licence applications from crypto trading firms have either been rejected or withdrawn, the watchdog’s chief executive Nikhil Rathi said.

Crypto exchanges like leader Binance, and FTX, cannot operate in Britain as they don’t have FCA approval for their anti-money laundering controls.

The FCA is set to have a new objective of keeping Britain a globally competitive financial centre, piling pressure on the watchdog to keep its doors open.

“We have taken quite a bit of heat from people saying we are allowing this innovative activity to move to other jurisdictions, and that other jurisdictions are stealing a march,” FCA chief executive Nikhil Rathi told a committee in parliament’s upper chamber, the House of Lords.

“That means sometimes turning down some of the largest players in the global market.”

FTX obtained a now suspended licence from the Cyprus regulator. Binance has obtained approval from some EU member state regulators.

Rathi said he stood by decisions to ban such platforms.

“That does require I think to have parliamentary support and political support when we take some of those robust decisions,” he said.

There are no consumer protections for crypto investments, and the FCA has no information on how much money UK consumers have put into cryptoasset platforms operated overseas.

“If they want to they can go all around the world and deposit money by credit card that we don’t track, and we have no means of tracking it,” Rathi said.

Cryptoassets are unregulated in Britain, but a new financial services and markets bill now being approved by parliament is expected to bring marketing of cryptoassets under the regulatory net, giving the FCA powers to protect consumers.

(Reporting by Huw Jones; Editing by Mark Potter)

(Reuters) – Founder of bankrupt cryptocurrency exchange FTX, Sam Bankman-Fried, is seeking commitments from investors to raise fresh cash, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

The former chief executive and a few remaining employees at FTX have spent the past weekend calling around in search of commitments from investors, the report said.

The Wall Street Journal could not determine if any investors have committed. A spokesperson for FTX did not immediately respond to a Reuters request for comment.

The company has been scrambling for funds since earlier this month after larger rival Binance backed out of a deal to buy FTX.

(Reporting by Niket Nishant in Bengaluru; Editing by Arun Koyyur)

By Dietrich Knauth and Brendan Pierson

(Reuters) – FTX Trading’s new CEO John J. Ray III, a lawyer tapped to lead the collapsed crypto exchange’s restructuring, previously oversaw the $23 billion bankruptcy of energy firm Enron Corp and has a reputation for boosting creditor recoveries.

Ray took over from founder Sam Bankman-Fried as FTX’s chief executive after a disastrous week for the company that started with a quickly abandoned buyout effort from rival exchange Binance Inc and culminated in a Chapter 11 filing in Delaware on Friday.

In Ray’s first few days as boss, the company has been hit by regulatory probes in various jurisdictions and reports of a hack of FTX apps and $1 billion of missing customer funds.

Ray said on Saturday the company was working with law enforcement and regulators to mitigate the problems and making “every effort” to secure assets.

FTX has yet to provide the Delaware bankruptcy court with any of the information that is customary in the first few days after a bankruptcy filing, a sign that Ray and the company’s lawyers are still trying to understand its operations and past transactions following its “crash landing”, according to Jared Elias, a professor of bankruptcy law at Harvard University.

Ray, 63, on Monday declined to comment on his initial priorities as FTX’s CEO. When asked about recent work, he pointed to his role in the bankruptcy of mortgage lender Residential Capital, in which he helped recover $1.8 billion for creditors by suing mortgage originators.

Ray is no stranger to high-profile restructurings and is perhaps best known for his work on Enron, which filed for bankruptcy in 2001 amid revelations of widespread accounting fraud and corruption.

Serving as Enron’s CEO throughout its years-long bankruptcy, Ray’s work resulted in major settlements with banks accused of helping Enron deceive investors, including a $1.66 billion settlement with Citigroup in 2008.

Mark Lichtenstein, an attorney who worked on Enron’s bankruptcy, saw many parallels between FTX and that case.

“You’ve got such a meltdown, similar to Enron, sort of a run on the bank,” Lichtenstein said. “He had the calm and the gravitas to step into a firestorm.”

Attorneys who worked on Enron’s bankruptcy, one of the largest in history, said it resulted in a better-than-expected outcome for creditors, thanks to Ray’s doggedness in clawing back money based on claims of fraud, accounting malpractice and preferential payouts.

“I have seen him go head to head with some of the most prominent people in the industry,” said John Delnero, an attorney who represented the Enron entity charged with recovering money for creditors. “John doesn’t blink.”

Ray has also worked as a restructuring executive or overseen litigation to benefit creditors in the bankruptcies of telecommunications company Nortel Networks, tanker operator Overseas Shipholding Group, Apple parts supplier GT Technologies, underwear maker Fruit of the Loom and camera company Polaroid Corporation.

(Reporting by Dietrich Knauth and Brendan Pierson in New York, Editing by Alexia Garamfalvi and Sam Holmes)

By Lisa Pauline Mattackal and Medha Singh

(Reuters) – Solana, a poster coin of the crypto future, is in trouble.

The cryptocurrency, which had been lauded by FTX’s founder Sam Bankman-Fried, has been hit harder than any other major coin by the collapse of the exchange.

The Solana token, or SOL, has dropped 53.8% since the furor began unfolding on Nov. 2. By comparison, ether has fallen about 20% and bitcoin 19%.

“In the current crypto shakeout, the most unfortunate innocent victim is the Solana ecosystem,” said Stefan Rust, CEO of blockchain wallet company Laguna Labs. He and several other crypto players said FTX and sister firm Alameda Research likely sold a large amount of the coin in an attempt to stay afloat.

Many investors and app developers look to be leaving the Solana blockchain, which is widely used for decentralized finance applications; the number of SOL coins deposited there has fallen to 24.74 million, some way south of the 68.2 million seen in June, according to data from aggregator DeFiLlama.

FTX and Alameda Research didn’t respond to requests for comment. Solana co-founder Anatoly Yakovenko tweeted that development company Solana Labs didn’t hold any assets on FTX and had enough financial runway for around 30 months. Another co-founder, Raj Gokal, said this was a “crucible” moment for the ecosystem, adding “each time, we’re stronger”.

Nonetheless, uncertainty stalks the blockchain that’s been dubbed an “Ethereum killer” in the past because of its lower transaction fees, faster processing speed and potential to scale.

“It’s not the end for Solana,” said Adam Struck, at LA-based venture firm Struck Capital. “It has established itself as a thriving ecosystem and competitor to Ethereum. But do I think valuation is a little frothy? Yes.”

Some see a silver lining.

“It’s much better for Solana that the connection with Sam Bankman-Fried’s empire is ending now, even if the result is serious short-term pain,” said Jack Saracco, co-founder of digital bank and payments solutions firm Ping.

SOL’s market capitalization has shrunk about 55% since Nov. 2, from $11.6 billion to $5.1 billion, according to data from CoinGecko. Ether’s market cap has fallen 21% to $150.7 billion, while bitcoin’s has fallen 18% to $319 billion.

‘BLOOD IN THE STREETS’

The FTX saga began unfolding in early November when news website CoinDesk reported a leaked balance sheet that showed Alameda Research was heavily dependent on FTX’s native token, FTT. Reuters was unable to verify the report. See timeline.

The exchange filed for bankruptcy on Friday after traders rushed to withdraw $6 billion from the platform in just 72 hours and rival Binance abandoned a proposed rescue deal.

The collapse of the company has seen more than $190 billion wiped from the value of the overall crypto market.

“This is what the old guys used to call ‘blood in the streets’,” said Martin Leinweber, digital asset product strategist at MarketVector Indexes. “There is no Fed or Treasury here to support prices, so the market simply cleans things up.”

Yet even amidst the blood-letting, there was some unexpected stability from stablecoins, which are pegged to the value of mainstream assets such as the U.S. dollar in an effort to reduce tame crypto volatility.

Despite the biggest stablecoin Tether having a brief wobble when it touched $0.985, according to CoinMarketCap, it managed to maintain its peg to the dollar, as did USDCoin, the second largest.

“Most stablecoins performed within their normal volatility bands with the exception of some small algorithmic ones,” Leinweber added.

That’s a reversal from earlier in the year when these coins, notably Tether, lost their peg as the market was hit by volatility following the collapse of the TerraUSD stablecoin..

Some investors attributed the new resilience of the stablecoins, often used to move funds between crypto and regular cash, to greater transparency over their reserves.

“Everyone expected Tether would be the first to fall but it hasn’t,” said Saracco at Ping. “I think a lot of observers don’t realize how battle-tested Tether really is.”

GRAPHIC: Pegged cryptos remain steady (https://graphics.reuters.com/FINTECH-CRYPTO/WEEKLY/jnpwyegnopw/chart.png)

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

(Reuters) – Financial regulators in the Bahamas on Monday appointed liquidators to run FTX’s unit in the country, just days after authorities said they were looking for any “criminal misconduct” by the collapsed crypto exchange.

The Securities Commission of The Bahamas said it had won court approval and appointed two members from PwC to oversee FTX Digital Markets Ltd, a subsidiary of FTX licensed in the country.

FTX filed for bankruptcy on Friday, one of the highest profile crypto blowups, after traders rushed to withdraw $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal.

“Given the magnitude, urgency, and international implications of the unfolding events with regard to FTX, the Commission recognized that it had to, and moved swiftly… to further protect the interests of clients, creditors, and other stakeholders globally,” the regulator said in a statement.

FTX did not respond to a Reuters’ request for comment.

FTX founder Sam Bankman-Fried, who lives in the Bahamas, has also been the subject of speculation about his whereabouts and he denied rumors on Twitter that he had flown to South America.

When asked by Reuters on Saturday whether he had flown to Argentina, he responded in a text message: “Nope”. He told Reuters he was in the Bahamas.

(Reporting by Akriti Sharma in Bengaluru; Editing by Subhranshu Sahu)

TOKYO (Reuters) – The European Central Bank (ECB) will probably continue to raise interest rates beyond 2%, but “jumbo” rate hikes will not become a new habit, France’s central bank chief said in a speech in Tokyo on Tuesday.

The ECB has increased rates at its fastest pace on record recently, hiking them by a combined 200 basis points to 1.5% in just three months.

“We are clearly approaching what I would call the ‘normalisation range’ which can be estimated at around 2%. We should reach this level by December,” French central bank Governor Francois Villeroy de Galhau said in the speech.

“Beyond this level, we will probably continue to raise rates, but we may do so in a more flexible and possibly less rapid manner. Jumbo rate hikes will not become a new habit.”

(Reporting by Daniel Leussink; Editing by Himani Sarkar)

(Reuters) – FTX founder and former Chief Executive Sam Bankman-Fried said he expanded his business too fast and failed to notice signs of trouble at the exchange, whose downfall sent shock waves through the crypto industry, the New York Times reported late on Monday.

“Had I been a bit more concentrated on what I was doing, I would have been able to be more thorough,” Bankman-Fried said in an interview with the newspaper.

FTX filed for bankruptcy on Friday, one of the highest-profile crypto blowups, after traders rushed to withdraw $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal.

The U.S. Justice Department, the Securities and Exchange Commission and the Commodity Futures Trading Commission are now all investigating how FTX handled customer funds, a source told Reuters.

Bankman-Fried, who is based in the Bahamas, declined to comment on his current location, citing safety concerns, the newspaper said.

When asked whether FTX used customer funds to prop up the trading firm Alameda Research that he founded, Bankman-Fried told the New York Times that Alameda had accumulated a large “margin position” on FTX.

“It was substantially larger than I had thought it was,” he said and added without providing details that the size of the position was in the billions.

Reuters reported last week that Bankman-Fried had secretly transferred $10 billion of customer funds from FTX to Alameda.

(Reporting by Ann Maria Shibu and Jaiveer Singh Shekhawat in Bengaluru; Editing by Leslie Adler)

(Reuters) – Michael Barr, the Federal Reserve’s top regulatory official, signaled on Monday that stiffer oversight of cryptocurrency is in the offing, after the collapse last week of crypto exchange FTX that sent shock waves through the industry.

Crypto-asset-related activity “requires effective oversight that includes safeguards to ensure that crypto companies are subject to similar regulatory safeguards as other financial services providers,” Barr said in written testimony released Monday ahead of an appearance at the Senate Banking committee Tuesday, his first before Congress since assuming the role of Fed vice chair for supervision. “We do not want to stifle innovation, but when regulation is lax or behind the curve, it can facilitate risk taking and a race to the bottom that puts consumers, businesses, and the economy in danger and discredits new products and services with consumers and investors.”

(This story has been refiled to correct ‘wages’ to ‘waves’ in the first paragraph)

(Reporting Ann Saphir and Lindsay Dunsmuir; Editing by Leslie Adler)

LONDON (Reuters) – After major crypto exchange FTX filed for U.S. bankruptcy protection on Friday, the crypto industry is bracing for further fallout.

Some of FTX’s investors have said they are writing their investment down to zero.

Other crypto firms may be exposed to FTX by having held tokens on the exchange or by owning FTX’s native token, FTT, which plunged around 94% last week.

While the extent of the contagion across crypto markets remains unclear, here are some firms who have given information about their exposure to FTX.

BINANCE

Binance Chief Executive Changpeng Zhao sparked concerns among investors on Nov. 6 when he said in a tweet that Binance would sell its holdings of FTT.

Zhao told a Twitter spaces event on Monday that Binance had previously held $580 million worth of FTT, of which “we only sold quite a small portion, we still hold a large bag”.

BLOCKFI

Embattled cryptocurrency lender BlockFi said it had significant exposure to FTX and that withdrawals from its platform continue to be paused.

“We do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US,” BlockFi said.

In July, FTX had signed a deal with the troubled crypto lender to provide it with a $400 million revolving credit facility with an option to buy it for up to $240 million.

CELSIUS NETWORK

Bankrupt crypto lender Celsius Network said in a tweet on Nov. 11 that it had 3.5 million Serum tokens (SRM) on FTX as well as around $13 million in loans to FTX-linked trading company Alameda Research. The loans were under-collateralised, mostly by FTT tokens, Celsius said.

COINBASE

Coinbase Global Inc said in a blog post on Nov. 8 that it had $15 million worth of deposits on FTX. It said it had no exposure to FTT, no exposure to Alameda Research, and no loans to FTX.

It said it had $5 billion in cash and cash equivalents at the end of Q3.

COINSHARES

Crypto asset manager CoinShares has $30.3 million worth of exposure to crypto exchange FTX, CoinShares said in a statement on Nov. 10.

CoinShares CEO Jean-Marie Mognetti said that the group’s financial health remains “strong”, adding that its net asset value at the end of Q3 was 240.6 million pounds ($282.51 million).

CRYPTO.COM

Singapore-based crypto exchange Crypto.com said on Nov. 14 it had moved about $1 billion to FTX over the course of a year, but most of it was recovered and exposure at the time of FTX’s collapse was less than $10 million.

CEO Kris Marszalek said the firm would prove all naysayers wrong on the platform being in trouble, and that it has a robust balance sheet and took no risks.

GALAXY DIGITAL

Crypto financial services company Galaxy Digital Holdings Ltd said in its third-quarter earnings statement on Nov. 9 – the day after FTX froze withdrawals – that it had a $76.8 million worth of exposure to FTX, of which $47.5 million was “in the withdrawal process”.

In the earnings call, Novogratz said Galaxy had more than $1 billion in cash and $1.5 billion in liquidity.

GALOIS CAPITAL

Hedge fund Galois Capital had half its assets trapped on FTX, co-founder Kevin Zhou told investors in a recent letter, the Financial Times reported, estimating the amount to be around $100 million.

Galois did not respond to Reuters comment requests sent via email and its website.

GENESIS

U.S. cryptocurrency broker Genesis Trading’s derivatives business has approximately $175 million in locked funds on FTX, the company said in a tweet on Nov. 10.

“Genesis has no material exposure to FTT or any other tokens issued by centralized exchanges,” the firm said in a tweet on Nov. 9.

KRAKEN

Cryptocurrency exchange Kraken said on Nov. 10 that it held about 9,000 FTT tokens on the FTX exchange and was not affected “in any material way”.

Kraken also said on Sunday it had frozen the accounts of FTX, Alameda Research and their executives.

SILVERGATE CAPITAL CORP

Silvergate Capital Corporation said on Friday FTX represented less than 10% of $11.9 billion deposits from all digital asset customers as of Sept. 30.

The financial solutions provider to digital assets also said Silvergate has no outstanding loans or investments in FTX, and FTX is not a custodian for Silvergate’s bitcoin-collateralized Silvergate Exchange Network (SEN) leverage loans.

VOYAGER DIGITAL

FTX won crypto lender Voyager Digital’s assets in a $1.42-billion bid at an auction in September months after the lender spurned an earlier proposal and called it a “low-ball bid dressed up as a white knight rescue”.

Voyager said on Nov. 11 it had reopened the bidding process for the company and maintained a balance of approximately $3 million at FTX when the embattled crypto exchange filed for protection from creditors.

($1 = 0.8516 pounds)

(Reporting by Elizabeth Howcroft in London and Mehnaz Yasmin and Medha Singh in Bengaluru; Editing by Jan Harvey and Anil D’Silva)

By Chuck Mikolajczak

NEW YORK (Reuters) – A gauge of global stocks ended lower on Monday in choppy trade and U.S. bond yields rose as investors assessed comments from Federal Reserve officials to try and determine the central bank’s path of rate hikes.

Equities rallied last week and U.S. Treasury yields tumbled after consumer price data indicated stubbornly high inflation may finally be starting to slow and give the Fed room to dial back its tightening policies, pushing MSCI’s gauge of stocks across the globe to its biggest weekly percentage gain in two years.

But on the heels of the equity rally, Federal Reserve Governor Christopher Waller said on Sunday that though the central bank may consider slowing the pace of rate increases at its next meeting, that should not be taken as a “softening” in the fight to bring down inflation, and while the data was “good news” it was “just one data point.”

Stocks briefly erased early losses and turned higher, while bond yields moved off earlier highs after Vice Chair Lael Brainard said on Monday the central bank would likely slow its interest rate hikes soon, but emphasized the Fed still had more work to do.

“There is still a sensitivity to Fed speak… One was a little hawkish, one was a little dovish,” said Eric Kuby, chief investment officer at North Star Investment Management Corp.

On Wall Street, the S&P 500 fell after recording its biggest weekly percentage gain since June last week, led by declines in real estate and consumer discretionary shares. Amazon.com fell 2.28% after reports the online retailer is planning to cut around 10,000 jobs in corporate and technology roles.

The Dow Jones Industrial Average fell 211.16 points, or 0.63%, to 33,536.7, while the S&P 500 lost 35.68 points, or 0.89%, to 3,957.25 and the Nasdaq Composite dropped 127.11 points, or 1.12%, to 11,196.22.

The pan-European STOXX 600 index closed up 0.14% and MSCI’s gauge of global stocks shed 0.59%.

Investors will get another look at inflation when the U.S. producer price index is released on Tuesday, while a slew of Fed officials are scheduled to speak this week.

Benchmark 10-year notes were up 4.2 basis points to 3.871% from 3.829% late on Thursday. The bond market was closed for the Veterans Day holiday on Friday.

The two-year yield was up 8 basis points at 4.406%, from 4.326%.

In contrast, dovish comments from European Central Bank policymaker Fabio Panetta and Cypriot policymaker Constantinos Herodotou helped send European bond yields lower, although short-dated rates remained near multi-year highs hit recently.

Germany’s 2-year government bond yield was up 0.2 basis points at 2.118% from 2.116%, after climbing to 2.252% last week, its highest since 2008.

After its biggest weekly percentage drop since March 2020 last week, the dollar index rose 0.122% as the greenback relinquished earlier gains, with the euro down 0.23% to $1.0328.

U.S.-listed Chinese stocks gained on reports regulators have asked financial institutions to extend more support to stressed property developers amid signs the government may be starting to relax some of its strict COVID-19 policies. E-commerce firm Alibaba.com shares rose 0.79%.

U.S. President Joe Biden met Chinese leader Xi Jinping in person on Monday on the sidelines of the G20 summit, with both stressing the need for a better dialogue between their nations and the two sides establishing a mechanism for more frequent communications.

In cryptocurrencies, bitcoin fell 2.59% to $16,320.60 after falling below $16,000 for the first time since Thursday as investors continue to assess the fallout from last week’s collapse of crypto exchange FTX.

(Reporting by Chuck Mikolajczak; Additional reporting by Ankika Biswas and Lewis Krauskopf; Editing by Jan Harvey, Chizu Nomiyama and Rosalba O’Brien)

(Reuters) – Cryptocurrency lender BlockFi said on Monday it has significant exposure to Sam Bankman-Fried’s crypto exchange FTX, and associated entities, that last week filed for bankruptcy.

“We do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US,” the company said.

(Reporting by Manya Saini in Bengaluru; Editing by Shailesh Kuber)

(Reuters) – U.S. prosecutors in New York are probing FTX’s collapse, a source with knowledge of the investigations said on Monday, after the crypto exchange filed for bankruptcy protection last week following a rush of customer withdrawals.

The downfall followed a failed rescue deal with rival exchange Binance, with FTX now facing scrutiny from U.S. regulators over its handling of customer funds, as well as its crypto-lending activities.

The U.S. Attorney’s Office in Manhattan declined to comment.

Reuters reported last week that at least $1 billion of customer funds have vanished from FTX, citing sources.

Cryptocurrencies have languished this year as higher interest rates and growing worries of an economic downturn cratered prices that eliminated key players such as Voyager Digital, Three Arrows Capital and Celsius Network.

But the bigger blow to digital assets came since FTX, which had developed a penchant for bailing out troubled crypto firms, showed early cracks. Bitcoin has slid below $16,000 for the first time since late 2020.

“Although investors have suffered significant losses, we believe this second “crypto winter” will be a net positive because the FTX collapse will edge the crypto ecosystem closer to the established financial sector,” Deutsche Bank analysts wrote in a note on Monday.

“The FTX crash spotlighted well-known structural issues in the crypto ecosystem: insufficient reserves, conflict of interest, a lack of regulation and transparency, and unreliable data.”

(This story has been corrected to remove reference to prosecutors with the Manhattan district of New York in headline and paragraph 1 and 3)

(Reporting by Chris Prentice in Washington and Mehnaz Yasmin in Bengaluru; Editing by Arun Koyyur)

(Reuters) – Recent losses in the cryptocurrency market show the need for cryptocurrencies to be regulated the same way traditional finance is, Fed Vice Chair Lael Brainard said on Monday.

“It’s really concerning to see that retail investors are really getting hurt by these losses,” Brainard said in an interview with Bloomberg in Washington.

Cryptofinance “needs to be under the regulatory perimeter,” she said.

(Reporting by Lindsay Dunsmuir)

(Reuters) – Digital currency futures and options clearinghouse LedgerX LLC submitted to the U.S. Commodity Futures Trading Commission a formal withdrawal of FTX’s request from December last year that sought to allow the crypto exchange to offer products that are not fully collateralized.

(Reporting by Chris Prentice in Washington and Mehnaz Yasmin in Bengaluru)

NUSA DUA, INDONESIA (Reuters) – Binance chief executive Changpeng Zhao said the cryptocurrency exchange plans to launch a fund to help crypto projects facing a liquidity crisis as the collapse of rival FTX ricochets through the industry.

The recovery fund will help “reduce further cascading negative effects of FTX,” Zhao said in a tweet on Monday, targeting projects that are “otherwise strong, but in a liquidity crisis”.

Binance, which abandoned a mooted rescue of FTX, did not immediately respond to a request for comment on the size of the planned fund.

The crypto industry is reckoning with the collapse of rival exchange Sam Bankman-Fried’s FTX, which filed for bankruptcy on Friday after users rushed to withdraw $6 billion in crypto tokens in just 72 hours.

Zhao said in a tweet on Nov. 6 that Binance would liquidate its holdings of FTX’s native token, FTT, which raised investor concerns about FTX’s balance sheet. Binance said on Nov. 8 it was considering a rescue deal for FTX, later abandoned after due diligence.

Earlier on Monday, Zhao called for new but stable and clear regulations for the industry, in light of recent developments and participants “cutting corners”.

“We’re in a new industry, we’ve seen in the past week, things go crazy in the industry,” Zhao told a gathering of G20 leaders at a summit in Bali. “We do need some regulations, we do need to do this properly, we do need to do this in a stable way.”

“I think the industry collectively has a role to protect consumers, to protect everybody. So it’s not just regulators. Regulators have a role but it’s not 100% their responsibility,” Zhao said.

Over the weekend, Zhao had tweeted that Binance had stopped accepting deposits of FTX’s FTT token on its platform, and urged other exchanges to do the same.

Zhao also said in a tweet on Monday that Binance “never shorted FTT”.

“We still have a bag of (FTT) as we stopped selling FTT after SBF (Sam Bankman-Fried) called me. Very expensive call,” he added.

(Reporting by Fransiska Nangoy and Gayatri Suroyo; Writing by Vidya Ranganathan; Editing by Jacqueline Wong, Kirsten Donovan)

By Ankur Banerjee and Vidya Ranganathan

SINGAPORE (Reuters) – Singapore-based crypto exchange Crypto.com’s chief executive said the firm will prove all naysayers wrong on the platform being in trouble, and that it has a robust balance sheet and took no risks.

Chief executive Kris Marszalek took questions in a livestreaming YouTube address, and also said the platform always maintained reserves to match every coin customers held on its platform.

“We will just continue with our business as usual and we will prove all the naysayers and there is (sic) many of these right now on Twitter over the last couple of days,” Marszalek said.

“We will prove them all wrong with our actions. We will continue operating as we have always operated. We will continue being the safe and secure place where everybody can access crypto.”

An audited proof of reserves report will be published within weeks, he said, and that the exchange did not engage in any “irresponsible lending products”.

The ‘AMA’ (ask-me-anything) came after investors took to twitter over the weekend to question a transfer of $400 million worth of ether tokens to another exchange called Gate.io on Oct. 21.

Marszalek had tweeted to say the ether was recovered and returned to the exchange, but that failed to calm a jittery market. The Wall Street Journal reported that withdrawals at Crypto.com rose over the weekend after Marszalek’s tweet.

“At no point were the funds at risk of being sent somewhere where we could not get it back. It happened over three weeks ago. It had nothing to do with any of the craziness that has been happening since FTX collapsed,” the CEO said in response to questions, which around 7,000 people watched live.

The cryptocurrency market is already on edge with the spectacular public collapse of FTX last week. FTX had gone from being one of the largest exchanges worldwide to filing for bankruptcy. A Reuters report found that at least $1 billion of client funds were missing from FTX.

“This has set the industry back a good couple of years in the reputation that we have built,” Marszalek said. “Trust was damaged, if not lost, and we need to focus on rebuilding trust.”

The movement of ether at Crypto.com was discovered by a user who dug through transactions after the company posted its cold wallet addresses online.

Crypto.com is among the top 10 exchanges by turnover globally, but smaller than FTX and market leader Binance. It made headlines in 2021 after it signed a $700 million deal to rename the Staples Center in Los Angeles as the Crypto.com Arena, and enlisted actor Matt Damon to promote the platform.

Marszalek said Crypto.com had 70 million individual customers worldwide, and had made revenues of a billion dollars in 2021 as well as in 2022.

The platform had moved about $1 billion to FTX over a year but most of it was recovered and exposure at the time of FTX’s collapse was less than $10 million, he said.

Asked about why the exchange had 20% of its reserves in the meme token Shiba Inu (SHIB), Marszalek said that was because reserves were a direct one-to-one reflection of client holdings and that SHIB and Dogecoin had been hugely popular in 2021.

(This story has been corrected to fix paragraph 14 to make clear FTX exposure was over a year, not earlier this year)

(Reporting by Ankur Banerjee and Vidya Ranganathan; additional reporting by Xinghui Kok; Editing by Jacqueline Wong & Simon Cameron-Moore)