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Dollar edges up, investors weigh outlooks for rates and economy

By Amanda Cooper

LONDON (Reuters) – The dollar edged up on Thursday, supported by a push higher in U.S. Treasury yields, as investors weighed the outlook for Federal Reserve policy against the chances that high interest rates could lead to a recession.

Next week brings a raft of major central bank decisions, including those from the Federal Reserve, the European Central Bank and the Bank of England.

The key question for traders and investors is whether inflation has reached a peak, giving policymakers more scope to deliver smaller interest-rate rises over the coming months.

U.S. monthly consumer inflation is also due next week, one day before the Fed’s policy meeting on Dec. 14, and could be pivotal in setting longer-term expectations for monetary policy.

“U.S. CPI is the one data release that seems to really matter for broader dollar direction at the moment and, until we got those central bank meetings and one key monthly U.S. data release, not a great deal is happening,” RBC currency strategist Adam Cole said.

The dollar was broadly steady against a range of major currencies. The euro was last flat against the greenback at $1.0507, while the pound eased 0.3% to $1.2171.

The yen, which is highly sensitive to shifts in U.S. Treasury yields, fell 0.25% to 136.90, surrendering some of Wednesday’s 0.4% gain.

The yield on the 10-year Treasury has fallen almost continuously since hitting a 15-year high in late October, having shed almost a full percentage point. In fact, it’s unwound around half the rise that took place between August’s four-month lows and October’s peak around 4.34%.

Meanwhile, oil prices have fallen below $80 a barrel for the first time since Russia invaded Ukraine in late February, as concern has mounted about how much a slowing economy will impact global energy demand.

Brent crude futures have dropped to around $78, having almost halved since early March’s 14-year high of $139.13. Gasoline prices at the pump in the United States, which in June hit a record $5.016, according to the American Automobile Association, are now at $3.329, down 0.4% on where they were at this point last year.

With energy prices having receded, market-based expectations for inflation have relaxed as well. The 10-year breakeven inflation spread, which subtracts the yield on an inflation-linked Treasury from that on a nominal 10-year note, is at just 2.27%, having peaked above 3% in April.

These two forces, together with diminishing expectations for the Fed to keep raising interest rates at the same aggressive pace, have knocked 6.2% off the value of the dollar so far this quarter.

This has put the greenback on course for its worst quarterly performance since the third quarter of 2010, when it dropped 8.5%, but for its worst fourth-quarter performance since 2004, according to Refinitiv data.

“The price action continues to highlight that market participants are becoming less concerned over upside inflation risks and more concerned over downside risks to global growth,” Lee Hardman, currency strategist at MUFG, said in a note.

The 10-year yield was last up 5 bps at 3.45%, having neared is lowest in almost three months overnight.

Money markets show there is a 91% chance that the policy-setting Federal Open Market Committee will raise rates by half a point next week, and just a 9% chance there will be another 75 basis point increase. Rates are now seen peaking at just below 5% in May.

Meanwhile, the yuan hovered close to an almost three-month high after China announced another loosening in some of its highly restrictive COVID restrictions.

The U.S. dollar edged 0.1% higher to 6.9670 yuan in offshore trading, clawing back some of its 0.34% decline from Wednesday, when the Chinese government announced a relaxation of some COVID-19 measures that have badly hampered the economy.

(Additional reporting by Kevin Buckland in Tokyo; Editing by Simon Cameron-Moore and Kim Coghill)

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Slowing crypto startup funding may still surpass 2021 record – Pitchbook

By Medha Singh

(Reuters) – Total funding at crypto startups this year is set to exceed investments in 2021, research firm Pitchbook said on Thursday though the pace of capital deployment is slowing as a series of crypto blowups sapped private equity investment appetite.

Crypto projects globally attracted $19.9 billion in venture capital (VC) investments in the first nine months of 2022, 41% higher than a year ago, according to Pitchbook data. In total, last year drew in a record $21.2 billion.

The amount of capital deployed, however, has trended downwards through this year with only $4.0 billion invested in third quarter, representing a 38.3% quarter-over-quarter decline and the lowest amount since second quarter 2021, Pitchbook said.

The collapse of FTX last month was the most shocking in a series of closures of key market players this year including Celsius and Voyager, major tokens terraUSD and Luna that have shaken investment sentiment and wiped out $1.5 trillion in cryptocurrency market capitalization.

“The lack of clear regulation and guidance remains one of the crypto industry’s greatest concerns and limiting factors,” said Robert Le, crypto analyst at PitchBook.

“Mainstream adoption is unlikely to occur until better guardrails in the form of established laws and guidelines are in place.”

A number of FTX backers including Singapore state investor Temasek Holdings, SoftBank Group Corp’s Vision Fund and Sequoia Capital marked down their investment to zero after the crypto exchange filed for bankruptcy.

“This bearish sentiment will continue for all of next year and you’re going to notice that the pace of investment and the amount of capital deployed is going to get lower and lower on concerns over contagion risk,” said Adam Struck, at LA-based venture capital firm Struck Capital.

VCs infused $1.5 billion in the so-called Web3 companies in third quarter, a 44.5% growth sequentially, according to Pitchbook.

Web3 – a term used to describe a potential next phase of the internet – was the only crypto segment that saw an increase in capital invested for the quarter as it is relatively more insulated from the day-to-day price movements of crypto tokens, Pitchbook’s Le said.

(Reporting by Medha Singh in Bengaluru; Editing by Dhanya Ann Thoppil)

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FTX founder Sam Bankman-Fried is said to face market manipulation inquiry by U.S. prosecutors – NYT

(Reuters) – U.S. federal prosecutors are investigating whether FTX’s founder Sam Bankman-Fried manipulated the market for two cryptocurrencies this May that led to their collapse and resulted in the implosion of his own cryptocurrency exchange, the New York Times reported on Wednesday.

The prosecutors are looking into whether Bankman-Fried controlled the prices of two interlinked currencies, TerraUsd and Luna, to benefit the entities he controlled including FTX and Alameda Research, the report said.

The investigation is in its early stages, the newspaper said, adding that it is not clear whether prosecutors have determined any wrongdoing by Bankman-Fried, or when they began looking at the TerraUSD and Luna trades.

A spokesperson for the Manhattan U.S. attorney’s office did not respond immediately to request for comment.

Regulators around the globe, including in the Bahamas where FTX is based and in the United States, are investigating the role of FTX’s top executives including Bankman-Fried in the firm’s stunning collapse, Reuters has previously reported.

The crypto exchange filed for bankruptcy last month after a liquidity crisis that saw at least $1 billion of customer funds vanish.

In recent weeks, U.S. authorities have sought information from investors and potential investors in FTX, according to two sources with knowledge of the requests.

Federal prosecutors in New York are asking for details on any communications such firms have had with the crypto firm and its executives, including Bankman-Fried, the sources said. Bloomberg previously reported the information requests.

FTX and Alameda research did not respond to Reuters request for comments.

(Reporting by Gokul Pisharody in Bengaluru; Editing by Kim Coghill)

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U.S. House committee chair says Bankman-Fried subpoena ‘definitely on the table’

(Reuters) – U.S. House of Representatives Financial Services Committee Chair Maxine Waters tweeted on Wednesday that a subpoena of FTX founder Sam Bankman-Fried was “definitely on the table.”

Waters’ tweet was in response to a CNBC report earlier in the day that said she did not plan to subpoena Bankman-Fried to testify before Congress on Dec. 13.

Waters had earlier said on Twitter that it was imperative that the FTX founder testify and that the committee was “willing to schedule continued hearings if there is more information to be shared later.”

(Reporting by Jyoti Narayan in Bengaluru; Editing by Leslie Adler)

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Celsius bankruptcy judge orders return of some crypto assets to customers

By Dietrich Knauth

(Reuters) – A U.S. bankruptcy judge on Wednesday ruled that some customers of crypto lender Celsius Network should receive their deposits back, giving relief to a relatively small group of customers whose deposits were never commingled with other Celsius funds.

U.S. Bankruptcy Judge Martin Glenn is weighing broader questions of who owns crypto assets that were deposited with Celsius.

His ruling Wednesday was limited to customers who had non-interest bearing custody accounts, whose funds were not commingled with other Celsius assets, and whose accounts were too small for Celsius to seek to claw them back to repay other customers, according to Celsius’ official creditors committee.

The creditors committee previously estimated that amount at stake for custody account holders was $50 million.

Judge Glenn has not yet ruled on ownership of Celsius “earn” accounts or “withhold” accounts.

Earn accounts, which paid interest to customers and allowed Celsius to use customer funds to make loans were the default account type at Celsius before regulatory investigations forced it to change course early in 2022.

Those regulatory investigations, which alleged that earn accounts were an unregistered securities offering, caused Celsius to create non-interest bearing custody accounts and withhold accounts.

New Jersey-based Celsius froze withdrawals in June, citing “extreme” market conditions, cutting off access to savings for individual investors. When it filed for Chapter 11 bankruptcy in July, Celsius reported $4.3 billion in assets and $5.5 billion in liabilities, primarily owed to its customers.

(Reporting by Dietrich Knauth; Editing by Lincoln Feast)

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Kim Kardashian, other celebrities beat EMax crypto investors’ lawsuit

By Jody Godoy

(Reuters) – A federal judge in California on Wednesday dismissed a lawsuit against reality TV star Kim Kardashian, boxing legend Floyd Mayweather Jr. and others over their role in promoting a cryptocurrency, saying it was not clear that the investors who sued actually saw the promotions.

The lawsuit filed in January claims EthereumMax executives schemed with celebrity promoters to induce investors to buy the EMax token, driving up its price and allowing them to sell their own tokens at a profit.

U.S. District Judge Michael Fitzgerald in Los Angeles said that the investors may amend and refile their proposed class action.

The decision comes as other celebrity promoters face lawsuits from users of the failed cryptocurrency exchange FTX, whose collapse has deepened an ongoing “crypto winter.”

Sean Masson, an attorney who represents the investors in the EthereumMax case, said they plan to revise their claims to add “a host of additional facts demonstrating defendants’ wrongdoing and liability.”

Michael Rhodes, the lead attorney for Kardashian, said the defense is “pleased with the court’s well-reasoned ruling.”

Attorneys for Mayweather did not immediately respond to a request for comment. Also named in the lawsuit was former National Basketball Association star Paul Pierce.

Kardashian promoted EthereumMax in a June 2021 post on Instagram, and Mayweather wore the company’s logo on his boxing trunks during a widely viewed fight, the investors said.

In Wednesday’s ruling, Fitzgerald said that investors had failed to show that the executives and promoters schemed to mislead investors, rather than acting in their own self-interest.

The investors’ fraud claims failed because they had not stated whether or when they saw the promotions, the judge wrote.

While the investors may revise those claims, Fitzgerald permanently dismissed their claim under California’s consumer protection law, which he said applies to tangible goods and services, not “intangible goods” such as cryptocurrency.

Kardashian agreed in October to pay the SEC $1.26 million to settle claims that she failed to disclose she was paid to promote EthereumMax tokens. She did not admit wrongdoing.

The case is In Re: Ethereummax Investor Litigation, No. 22-00163.

(Reporting by Jody Godoy in New York; Editing by Noeleen Walder and Matthew Lewis)

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Crypto lender Genesis tells clients it is working to preserve their assets

LONDON (Reuters) – U.S. crypto firm Genesis is working to preserve client assets and strengthen liquidity, it said in a letter to clients on Wednesday, adding that it would take “weeks rather than days” to form a plan.

Genesis’ lending arm, Genesis Global Capital, froze customer withdrawals on Nov. 16, citing “unprecedented market dislocation” following the collapse of major crypto exchange FTX.

Genesis, owned by venture capital firm Digital Currency Group (DCG), said last week it was seeking to avoid a bankruptcy filing.

“Working in consultation with highly experienced advisors and in close collaboration with our owner, DCG, we are evaluating the most effective path to preserve client assets, strengthen our liquidity, and ultimately move our business forward,” Genesis said in the letter.

“We anticipate that it will take additional weeks rather than days for us to arrive at a path forward.”

All other parts of Genesis’ business are “fully operational,” it added.

Crypto lenders, the de facto banks of the crypto world, boomed during the pandemic, attracting retail customers with double-digit rates in return for their cryptocurrency deposits.

Genesis had almost $3 billion in total active loans at the end of the third quarter, its website said. Last year, Genesis extended $130.6 billion in crypto loans and traded $116.5 billion in assets.

Genesis and Digital Currency Group owe customers of the Winklevoss twins’ crypto exchange Gemini $900 million, the Financial Times reported on Saturday.

Gemini said in a statement on its website on Nov. 16 that it had partnered with Genesis for its yield-generating “Earn” program, leaving customers of this product unable to redeem their funds when Genesis froze withdrawals.

(Reporting by Elizabeth Howcroft; Editing by Tom Wilson and Richard Chang)

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U.S. court weighs novel issue of crypto ownership in bankruptcy

By Tom Hals and Dietrich Knauth

WILMINGTON, Del. (Reuters) – A U.S. judge this week is considering for the first time the question of who owns bitcoin and other tokens in frozen accounts at a bankrupt digital asset exchange in a case that could shape customer protections in the cryptocurrency industry.

U.S. Bankruptcy Judge Martin Glenn in New York City will sort through who owns cryptocurrencies held in accounts at the Celsius Network LLC exchange, which suspended withdrawals and then fell into Chapter 11 during this year’s crypto crash.

Glenn’s eventual rulings will help shape the treatment of crypto in accounts that have been frozen at other failed firms such as FTX, Voyager Digital Ltd and BlockFi, which do not have enough funds to repay everyone in full.

If Celsius deposits are determined to belong to customers, users are far more likely to get their assets returned. If the account holdings belong to Celsius, those customers will be at the back of the line for repayment, collecting pennies on the dollar.

Unlike bank deposits or brokerage accounts, which are backed by the U.S. government up to $250,000 and $500,000 respectively, crypto deposits are not insured and digital asset companies are lightly regulated and often operate offshore.

Crypto companies typically offer a variety of accounts and they will likely be treated differently in bankruptcy.

Celsius, for one, has argued that its “earn” accounts, which offer interest to customers, should be treated differently than its “custody” accounts, which provide a place to store cryptocurrency without generating interest. BlockFi, which is at the beginning of its own bankruptcy case, also offers both interest-bearing and custody accounts.

“It can get complicated,” Glenn said during Wednesday’s hearing. “I’m trying as expeditiously as possible to get through as many issues as I can.”

‘WORSE THAN BANKS’

Courts will also have to look beyond the user agreements and examine how crypto companies actually handled the deposits, according to bankruptcy specialists.

“That’s going to be a really thorny issue for the court, because there’s the representation of what should have been happening versus what is actually happening on the ground,” said Yesha Yadav, an associate dean and law professor at Vanderbilt University.

FTX customers have sought comfort in the fact that their terms of service say they own the crypto in their account. FTX founder Sam Bankman-Fried pushed back on that idea when asked about it last week during a New York Times DealBook interview.

“So there is that piece from the terms of service,” Bankman-Fried said when asked if the agreement prevented FTX from transferring customers’ funds to its trading unit Alameda Research. “But there were a number of other parts of the terms of service, a number of other parts of the platform on top of that.”

If a company was using the deposited crypto to make loans or comingled it with other clients’ holdings, as was the case with Celsius’ high-yield accounts, it would be evidence the firm owned the crypto the same way a traditional bank owns its deposits.

Celsius wants Glenn to declare the crypto in “custody” accounts as client property. It wants the judge to find the holdings in the high-yield “earn” accounts are property of Celsius, which plans to use some tokens to pay for the lawyers and advisers to plot a way out of Chapter 11 bankruptcy.

“I felt like I was stabbed in the back, because numerous times (Celsius founder Alex) Mashinsky said, ‘banks are not your friends,'” Daniel Frishberg, an “earn” customer, told Reuters before Wednesday’s hearing. “In fact, they were much worse than the banks.”

A ruling on crypto ownership may not be the end of the road for customers, however. Even if the customers clearly own the assets, bankrupt crypto companies won’t have enough funds to pay everyone back, and determining who gets paid in what amounts may take months or years.

“The bankruptcy courts are now the vanguard of rulemaking in relation to crypto, because it’s going to be deciding fundamental issues in relation to asset allocation and client custody,” Yadav said. “This is going to have enormous influence on crypto companies and crypto customer behavior.”

(Reporting by Tom Hals in Wilmington, Del., and Dietrich Knauth in New York; Editing by Amy Stevens, Noeleen Walder and Matthew Lewis)

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Exclusive: Canada’s biggest pension plan, CPPI, ends crypto investment pursuit – sources

By Divya Rajagopal

TORONTO (Reuters) – Canada’s biggest pension fund, CPP Investments, has ended its effort to study investment opportunities in the volatile crypto market, two people familiar with the matter told Reuters.

The reasons behind CPPI’s abandonment of crypto research were not immediately clear. CPPI declined to comment but said it has made no direct investments in crypto. It referred to previous comments on cryptocurrency by its CEO, John Graham, in which he sounded a note of caution.

CPPI’s Alpha Generation Lab, which examines emerging investment trends, had formed a three-member team in early 2021 to research crypto currencies and blockchain-related businesses, with a view to taking potential exposure, the people added.

But CPPI abandoned the pursuit this year and redeployed the team to other areas, the sources said.

CPPI’s move also comes as two of Canada’s largest pension funds have written off their investments after the collapse of crypto exchange FTX and crypto lender Celsius this year.

Earlier this year CPPI CEO Graham said that the pension plan, which manages C$529 billion ($388 billion) for nearly 20 million Canadians, did not want to invest in crypto merely because of the fear of missing out.

“You want to really think about what the underlying intrinsic value is of some of these assets and build your portfolio accordingly,” Graham said in a June speech. “So I’d say crypto is something we continue to look at and try to understand, but we just haven’t really invested in it.”

It was unclear when CPPI dropped its plan. One of the sources said the team was actively assessing investment opportunities as late as July this year, but the second source said the team ended its work earlier than that.

The details of CPPI’s pursuit of cryptocurrency investment and its decision to end it have not been previously reported.

The sources declined to be identified because the information was not public.

Canadian pension funds’ exposure to crypto sector has come under scrutiny following the FTX debacle. While Canadian pension funds are not prohibited from buying cryptocurrencies, they are known for their risk-averse investing strategies to generate steady returns for pensioners.

While CPPI has avoided crypto investments, some of its peers have been caught up in the sector’s mayhem this year. The Ontario Teachers Pension Fund (OTPP), which oversees about C$242 billion in assets, has written off its investments worth C$95 million in FTX. OTPP said it was “disappointed” with its investment in FTX.

Earlier this year, Canada’s second-largest pension fund, Caisse de dépôt et placement du Québec (CDPQ), said it was writing off its investment of C$150 million in bankrupt crypto lending firm Celsius. CDPQ has initiated legal proceedings against Celsius in bankruptcy court.

The Ontario Municipal Employees Retirement System (OMERS), which manages C$121 billion, made three allocations to crypto-linked businesses through its OMERS Ventures business between 2012 and 2018 but exited all investments in 2020.

Another Canadian pension fund, OP Trust, told Reuters that it has investments in the digital asset fund space that is managed externally. The investment is in the underlying crypto technology, it said.

($1 = 1.3650 Canadian dollars)

(Reporting by Divya Rajagopal in Toronto; Additional reporting by Maiya Keidan; Editing by Denny Thomas and Matthew Lewis)

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UK watchdog says applying lessons from FTX crypto collapse will be ‘pacy’

By Huw Jones

LONDON (Reuters) – Lessons will be applied swiftly from the collapse of crypto exchange FTX that left 80,000 UK investors nursing losses even though the platform was not registered in Britain, the UK Financial Conduct Authority said on Wednesday.

Matthew Long, the FCA’s first director in the newly created digital assets unit, said FTX combined issuance of tokens, trading, wholesale market activity and safeguarding of funds in one place.

“In our view, extremely dangerous because you can have interaction between each of those things, which in other regulated areas would be separate legal entities or have ‘sterile’ corridors so they couldn’t effectively influence each other,” Long told parliament’s Treasury Select Committee.

“We need a regulation that deals with those sterile corridors so we don’t see what we have already seen.”

The FCA along with other global regulators at IOSCO, an umbrella group for securities watchdogs, are looking at how those activities could separately be covered by best practice rules, with recommendations to members in mid-2023, Long said.

Long said regulators’ response to the FTX debacle would be “pacy”.

IOSCO chair Jean-Paul Servais told Reuters last month that past experience with regulating firms like credit rating agencies would be used to deal with conflicts of interest at crypto “conglomerates” like FTX.

Britain is approving a financial services and markets bill that will give the FCA powers to regulate the crypto market, with the finance ministry due to issue a public consultation perhaps as soon as Friday on “world leading” rules.

The European Union is also finalising its own crypto regime.

Currently crypto dealings are unregulated in Britain, with firms only needing to show they can comply with anti-money laundering rules.

“In terms of dark money, there is money laundering that is running through crypto,” Long said.

Sarah Prichard, the FCA’s executive director for markets, told the committee that crypto promotions would be regulated like other “high risk” investments, labelled with a warning that investors should not invest unless willing to lose their money.

(Reporting by Huw Jones; Editing by Hugh Lawson)

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Coinbase CEO expects revenue to plunge over 50% – Bloomberg News

(Reuters) – Cryptocurrency exchange Coinbase Global Inc revenue is set to reduce to half this year, Bloomberg News reported, citing an interview with chief executive officer Brian Armstrong.

Coinbase did not immediately respond to a Reuters request for comment.

(Reporting by Mehnaz Yasmin in Bengaluru; Editing by Krishna Chandra Eluri)

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SEC chair says crypto intermediaries should come into compliance with law

WASHINGTON (Reuters) – U.S. Securities and Exchange Commission Chair Gary Gensler said that companies that help facilitate transactions in the cryptocurrency market should come into compliance with law.

The SEC has enough authority but could use more resources, Gensler told Yahoo Finance in an interview on Tuesday. He labeled the crypto intermediaries as “crypto casinos.”

The SEC chair added that next Wednesday, the agency will take up recommendations from agency staff on equity market structure.

(Reporting by Kanishka Singh in Washington)

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ECB seeks urgent regulation after multiple crypto bubbles burst

FRANKFURT (Reuters) – Crypto assets are here to stay so their regulation is urgently needed to protect investors and the stability of the global financial landscape, European Central Bank board member Fabio Panetta said on Wednesday.

Crypto investors suffered a series of blows this year from the collapse of the FTX exchange, to the crash of stablecoin TerraUSD and the decline of Bitcoin.

“This is not just a bubble that is bursting. It is like froth: multiple bubbles are bursting one after another,” Panetta said in a speech in London. “Investors’ fear of missing out seems to have morphed into a fear of not getting out.”

Unbacked crypto assets are a form of financial gambling without any socially or economically useful function, so the task is to thwart criminal activity, protect unassuming investors and save a financial system that may become increasingly intertwined with crypto assets, Panetta said.

Graphic: Market capitalisation of crypto assets https://fingfx.thomsonreuters.com/gfx/mkt/byvrljzkave/Pasted%20image%201670422836032.png

Even stablecoins, which are supposed to keep their value through ties to a pool of assets, are stable in name only, Panetta said.

“But these flaws alone are unlikely to spell the end of cryptos,” Panetta said. “Gambling is perhaps the second oldest profession in the world.”

The links between the crypto market and the financial system could strengthen, especially if major tech companies enter the sector, meaning regulation is urgently required, Panetta said.

Regulatory efforts should be directed primarily at preventing the use of crypto-assets to circumvent financial regulation and in shielding the mainstream financial system from crypto risks, Panetta said.

(Reporting by Balazs Koranyi; editing by Barbara Lewis)

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Big firms like Ticketmaster can become ‘too big to care,’ – U.S. FTC chair

By Diane Bartz

WASHINGTON (Reuters) – The chair of the Federal Trade Commission, Lina Khan, on Tuesday said giant companies like Ticketmaster, which faces a tsunami of criticism for problems in selling tickets to a 2023 Taylor Swift tour, can become “too big to care.”

Speaking at the Wall Street Journal’s CEO Council Summit, Khan said it was the Justice Department that approved the merger of Ticketmaster and Live Nation in 2010 and referenced a report that the department had a probe under way.

“There can be concerns that when firms become (large) they can become too big to care,” she added, saying giant firms may feel no need to invest in innovation because they do not face tough competition.

“There’s been public reporting that the Justice Department continues to look at this and I’m sure it’s top of mind for them, given all the incoming that they’re getting,” she added.

Ticketmaster has drawn fresh heat from U.S. lawmakers over how it handled ticket sales for Swift’s first tour in five years.

On Tuesday, a bipartisan group of lawmakers from the House Energy and Commerce Committee wrote to Michael Rapino, chief executive of Ticketmaster parent Live Nation, to raise concerns about the chaos in the Taylor Swift ticket sale and to request a briefing for staff on fees, dynamic pricing, ticket availability and transferability and scalping.

There will also be a congressional hearing, likely this month, on the debacle in November when Ticketmaster put tickets on sale for Taylor Swift’s Eras tour, and some fans struggled for hours with the ticket sale website.

Last month, U.S. lawmakers pressed the FTC to enforce a 2016 law against ticket scalpers using bots after Ticketmaster blamed the software for troubles selling tickets to Swift’s tour.

Ticketmaster has blamed problems with presale ticketing for the tour on unprecedented demand and an effort to keep out bots run by ticket scalpers.

For her part, Swift has said it was “excruciating” for her to watch fans struggle to secure tickets and that she had been assured that Ticketmaster could handle large demand.

Neither Ticketmaster nor the Justice Department immediately responded to requests for comment.

Khan also said that the FTC was not investigating cryptocurrency firm FTX, whose dramatic collapse sparked fears of contagion and prompted calls for more crypto regulation.

(Reporting by Diane Bartz; Editing by Cynthia Osterman and David Gregorio)

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Dollar inches higher after previous day’s jump; investors look to Fed next week

By Caroline Valetkevitch

NEW YORK (Reuters) – The U.S. dollar was up slightly against the euro and yen on Tuesday as U.S. stocks sold off, while investors were trying to position for next week’s expected interest rate hike from the U.S. Federal Reserve.

The dollar’s activity was also more muted after it rose sharply in the previous session following data showing U.S. services industry activity unexpectedly picked up in November, which prompted investor speculation the Fed may lift rates more than recently projected. Traders currently expect a half-point hike from the Fed in its announcement Dec. 14.

“There’s not a lot of fresh incentives,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “There was a lot of price action yesterday,” but the big focus is on next week’s Fed meeting.

Next week’s calendar also includes the release of the key consumer price index data for November.

The dollar may be benefiting from bearish sentiment in equities, Chandler said, noting that the greenback “has tended to benefit from a risk-off environment.” All three major U.S. stock indexes ended down sharply on Tuesday, with the S&P 500 declining for a fourth straight session.

The U.S. dollar index, which measures the currency against six major peers, remains up roughly 10% for the year so far. It was last up 0.3% on Tuesday.

The euro was down 0.2% against the dollar at $1.0465, while the dollar was up 0.1% against the Japanese yen.

European Central Bank policymaker Constantinos Herodotou said on Tuesday interest rates will go up again but are now “very near” their neutral level.

The dollar was up 0.5% against the Canadian dollar ahead of the Bank of Canada’s rate decision on Wednesday. Traders are pricing in a 73.3% chance of a dialed-down 25 basis-point hike from the BoC, although a slim majority of economists polled by Reuters are expecting a 50 basis point rate hike.

The Australian dollar was last down 0.1% at $0.6687. It rose earlier after the Reserve Bank of Australia (RBA) raised rates for the eighth time in as many months. Also, the RBA said it was not on a preset course to tighten policy but inflation was still high.

The Western price cap on Russian seaborne crude, which came into force on Monday, may start to show its impact on the energy market soon, said Francesco Pesole, FX strategist at ING.

========================================================

Currency bid prices at 3:37PM (2037 GMT)

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

Previous Change

Session

Dollar index

105.5500 105.2300 +0.31% 10.335% +105.6300 +104.8900

Euro/Dollar

$1.0465 $1.0493 -0.23% -7.92% +$1.0533 +$1.0460

Dollar/Yen

136.9450 136.8000 +0.12% +18.98% +137.4200 +135.9800

Euro/Yen

143.30 143.50 -0.14% +9.96% +144.0000 +143.1100

Dollar/Swiss

0.9419 0.9427 -0.08% +3.26% +0.9455 +0.9378

Sterling/Dollar

$1.2136 $1.2185 -0.40% -10.26% +$1.2269 +$1.2136

Dollar/Canadian

1.3654 1.3587 +0.49% +7.99% +1.3675 +1.3558

Aussie/Dollar

$0.6687 $0.6699 -0.13% -7.97% +$0.6744 +$0.6681

Euro/Swiss

0.9855 0.9886 -0.31% -4.96% +0.9909 +0.9857

Euro/Sterling

0.8620 0.8606 +0.16% +2.62% +0.8632 +0.8576

NZ

Dollar/Dollar $0.6318 $0.6316 +0.07% -7.66% +$0.6354 +$0.6305

Dollar/Norway

10.0250 9.9550 +0.70% +13.80% +10.0445 +9.9025

Euro/Norway

10.4906 10.4294 +0.59% +4.77% +10.5166 +10.3953

Dollar/Sweden

10.4164 10.3943 -0.09% +15.51% +10.4403 +10.3385

Euro/Sweden

10.9018 10.9113 -0.09% +6.52% +10.9407 +10.8750

(Additional reporting by Joice Alves in London; Editing by Alexander Smith and Nick Zieminski; Editing by Will Dunham)

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FTX’s Bankman-Fried hires white collar defense attorney Mark Cohen

By Chris Prentice

NEW YORK (Reuters) – FTX founder and former chief executive Sam Bankman-Fried has hired former prosecutor Mark S. Cohen to represent him, as U.S. authorities probe the crypto exchange’s collapse, a spokesperson for Bankman-Fried said on Tuesday.

Regulators around the globe, including in the Bahamas where FTX is based and in the United States, are investigating the role of FTX’s top executives including Bankman-Fried in the firm’s stunning collapse, Reuters has previously reported. The crypto exchange filed for bankruptcy last month after a liquidity crisis that saw at least $1 billion of customer funds vanish.

Bankman-Fried has retained Cohen, of Cohen & Gresser, Bankman-Fried’s spokesperson Mark Botnick said in an emailed statement. Cohen could not be reached for comment.

Prosecutors and regulators have not charged Bankman-Fried with wrongdoing. He is facing civil lawsuits from investors and FTX customers.

David Mills, a professor at Stanford Law School, is consulting on the matter, Botnick said. Mills did not respond to requests for comment. Semafor previously reported Mills’ advisory work for Bankman-Fried.

Cohen, a former assistant United States attorney for the Eastern District of New York, recently defended Ghislaine Maxwell in her sex trafficking trial.

Bankman-Fried had previously hired Martin Flumenbaum of law firm Paul, Weiss, Rifkind, Wharton & Garrison, but the law firm said last month it was no longer representing him due to conflicts.

In recent weeks, U.S. authorities have sought information from investors and potential investors in FTX, according to two sources with knowledge of the requests. Federal prosecutors in New York are asking for details on any communications such firms have had with the crypto firm and its executives, including Bankman-Fried, the sources said. Bloomberg previously reported the information requests.

The Securities and Exchange Commission has been asking for similar information from investors as well, one of the sources said.

Those sources and attorneys, speaking on condition of anonymity, have said that U.S. authorities are likely looking for any evidence of material misrepresentations of information to investors.

Spokespeople for the Manhattan U.S. attorney’s office and the SEC declined to comment on the information request.

FTX secretly transferred customer funds to its affiliate Alameda Research to fill a shortfall at the crypto trading firm, Reuters has previously reported.

Speaking via video link at the New York Times’ Dealbook Summit with Andrew Ross Sorkin on Wednesday, Bankman-Fried said he did not knowingly commingle customer funds on FTX with funds at his proprietary trading firm, Alameda Research.

“I didn’t ever try to commit fraud,” Bankman-Fried said, adding that he doesn’t personally think he has any criminal liability.

(Additional reporting by Alison Frankel and John McCrank; Editing by Megan Davies, Noeleen Walder and Leslie Adler)

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Most crypto likely to be regulated as securities, says CEO of NYSE-owner ICE

NEW YORK (Reuters) – Most cryptocurrency tokens will likely be regulated as securities under existing securities laws in the fallout of the collapse of crypto exchange FTX, Jeff Sprecher, chief executive officer of NYSE-owner Intercontinental Exchange Inc, said on Tuesday.

“I think you’re going to see essentially tokens become securities – I mean they probably already are, but they’re going to be regulated and dealt like securities,” Sprecher said at a financial services conference hosted by Goldman Sachs Group Inc.

(Reporting by John McCrank)

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Exclusive-Goldman Sachs on hunt for bargain crypto firms after FTX fiasco

By Iain Withers and Lawrence White

LONDON (Reuters) – Goldman Sachs plans to spend tens of millions of dollars to buy or invest in crypto companies after the collapse of the FTX exchange hit valuations and dampened investor interest.

FTX’s implosion has heightened the need for more trustworthy, regulated cryptocurrency players, and big banks see an opportunity to pick up business, Mathew McDermott, Goldman’s head of digital assets, told Reuters.

Goldman is doing due diligence on a number of different crypto firms, he added, without giving details.

“We do see some really interesting opportunities, priced much more sensibly,” McDermott said in an interview last month.

FTX filed for Chapter 11 bankruptcy protection in the United States on Nov. 11 after its dramatic collapse, sparking fears of contagion and amplifying calls for more crypto regulation.

“It’s definitely set the market back in terms of sentiment, there’s absolutely no doubt of that,” McDermott said. “FTX was a poster child in many parts of the ecosystem. But to reiterate, the underlying technology continues to perform.”

While the amount Goldman may potentially invest is not large for the Wall Street giant, which earned $21.6 billion last year, its willingness to keep investing amid the sector shakeout shows it senses a long term opportunity.

Its CEO David Solomon told CNBC on Nov. 10, as the FTX drama was unfolding, that while he views cryptocurrencies as “highly speculative”, he sees much potential in the underlying technology as its infrastructure becomes more formalized.

Rivals are more sceptical.

“I don’t think it’s a fad or going away, but I can’t put an intrinsic value on it,” Morgan Stanley CEO James Gorman said at the Reuters NEXT conference on Dec. 1.

HSBC CEO Noel Quinn, meanwhile, told a banking conference in London last week he has no plans to expand into crypto trading or investing for retail customers.

Goldman has invested in 11 digital asset companies that provide services such as compliance, cryptocurrency data and blockchain management.

McDermott, who competes in triathlons in his spare time, joined Goldman in 2005 and rose to run its digital assets business after serving as head of cross asset financing.

His team has grown to more than 70 people, including a seven-strong crypto options and derivatives trading desk.

Goldman Sachs has also together with MSCI and Coin Metrics launched data service datonomy, aimed at classifying digital assets based on how they are used.

The firm is also building its own private distributed ledger technology, McDermott said.

‘TRUSTED’ PLAYERS

The global cryptocurrency market peaked at $2.9 trillion in late 2021, according to data site CoinMarketCap, but has shed about $2 trillion this year as central banks tightened credit and a string of high-profile corporate failures hit. It last stood at $865 billion on Dec. 5.

The ripple effects from FTX’s collapse have boosted Goldman’s trading volumes, McDermott said, as investors sought to trade with regulated and well capitalized counterparties.

“What’s increased is the number of financial institutions wanting to trade with us,” he said. “I suspect a number of them traded with FTX, but I can’t say that with cast iron certainty.”

Goldman also sees recruitment opportunities as crypto and tech companies shed staff, McDermott said, although the bank is happy with the size of its team for now.

Others also see the crypto meltdown as a chance to build their businesses.

Britannia Financial Group is building its cryptocurrency-related services, its chief executive Mark Bruce told Reuters.

The London-based company aims to serve customers who are eager to diversify into digital currencies, but who have never done so before, Bruce said. It will also cater to investors who are very familiar with the assets, but have become nervous about storing funds at crypto exchanges since FTX’s collapse.

Britannia is applying for more licenses to provide crypto services, such as doing deals for wealthy individuals, he said

“We have seen more client interest since the demise of FTX,” he said. “Customers have lost trust in some of the younger businesses in the sector that purely do crypto, and are looking for more trusted counterparties.”

(Reporting by Iain Withers and Lawrence White, Editing by Lananh Nguyen and Alexander Smith)

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Man behind the iPod launches new cryptocurrency wallet

By Martin Coulter

LONDON (Reuters) – Tony Fadell, a well-known Silicon Valley executive known as the father of the iPod, on Tuesday unveiled his latest project – a hardware wallet used to store cryptocurrency offline.

Fadell, 53, spent almost a decade at Apple under Steve Jobs, where he oversaw the design of the portable music player, and later helped create the company’s best-known device, the iPhone.

After quitting Apple in 2008, he launched Nest Labs, a smart home-devices company. Nest was later acquired by tech giant Google for $3.2 billion.

Now Fadell has teamed up with Ledger, the French technology firm, to design a new offline cryptocurrency wallet.

Trading crypto requires the use of complex cryptographic keys, which are used to authorise transactions. These keys are typically stored online, for example with an online exchange, which can leave them more susceptible to hacking or theft.

The recent collapse of crypto exchange FTX, which has seen more than $1 billion of customer funds vanish, prompted an unprecedented surge in demand for offline, or “self-custody”, services such as Ledger.

Previous models released by Ledger, such as the Nano S and Nano S, have been shaped like USB memory sticks. Fadell’s new design, the Ledger Stax, is a credit-card sized device featuring a curved spine and electronic-ink display.

“All of the secure hardware up to this point was like all the MP3 players before the iPod, and it was time for an iPod,” Ian Rogers, chief experience officer at Ledger, told Reuters.

Fadell had previously expressed scepticism of some elements of “Web 3.0,” a catch-all term encompassing a host of next-generation decentralised technologies, including cryptocurrency and the metaverse.

The Ledger Stax will sell for $279 online from early 2023.

(Reporting by Martin Coulter; Editing by Matt Scuffham and Louise Heavens)

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FX swap debt a $80 trillion ‘blind spot’ BIS says

By Marc Jones

LONDON (Reuters) – Pension funds and other ‘non-bank’ financial firms have more than $80 trillion of hidden, off-balance sheet dollar debt in FX swaps, the Bank for International Settlements (BIS) said.

The BIS, dubbed the central bank to the world’s central banks, also said in its latest quarterly report that 2022’s market upheaval had largely been navigated without major issues.

Having repeatedly urged central banks to act forcefully to dampen inflation, it struck a more measured tone and picked over crypto market troubles and September’s UK bond market turmoil.

Its main warning concerned what it described as the FX swap debt “blind spot” that risked leaving policymakers in a “fog”.

FX swap markets, where for example a Dutch pension fund or Japanese insurer borrows dollars and lends euro or yen before later repaying them, have a history of problems.

They saw funding squeezes during both the global financial crisis and again in March 2020 when the COVID-19 pandemic wrought havoc that required central banks such as the U.S. Federal Reserve to intervene with dollar swap lines.

The $80 trillion-plus “hidden” debt estimate exceeds the stocks of dollar Treasury bills, repo and commercial paper combined, the BIS said. It has grown from just over $55 trillion a decade ago, while the churn of FX swap deals was almost $5 trillion a day in April, two thirds of daily global FX turnover.

For both non-U.S. banks and non-U.S. ‘non-banks’ such as pension funds, dollar obligations from FX swaps are now double their on-balance sheet dollar debt, it estimated.

“The missing dollar debt from FX swaps/forwards and currency swaps is huge,” the Switzerland-based institution said, adding the lack of direct information about the scale and location of the problems was the key issue.

CLOSER

The report also assessed broader recent market developments.

BIS officials have been loudly calling for forceful interest rate hikes from central banks as inflation has taken hold, but this time it struck a more measured tone.

Asked whether the end of the tightening cycle may be looming next year, the head of the BIS’ Monetary and Economic Department Claudio Borio said it would depend on how circumstances evolve, noting also the complexities of high debt levels and uncertainty about how sensitive borrowers now are to rising rates.

The crisis that erupted in UK gilt markets in September also underscored that central banks could be forced to step in and intervene – in the UK’s case by buying bonds even at a time when it was raising interest rates to curb inflation.

“The simple answer is one is closer than one was at the beginning, but we don’t know how far central banks will have to go,” Borio said about interest rates.

“The enemy is an old enemy and is known,” he added, referring to inflation. “But it’s a long time since we have been fighting this battle”.

DINO-MITE

The report also focused on findings from the recent BIS global FX market survey, which estimated that $2.2 trillion worth of currency trades are at risk of failing to settle on any given day due to issues between counterparties, potentially undermining financial stability.

The amount at risk represents about one third of total deliverable FX turnover and is up from $1.9 trillion from three years earlier when the last FX survey was carried out.

FX trading also continues to shift away from multilateral trading platforms towards “less visible” venues hindering policymakers “from appropriately monitoring FX markets,” it said.

The bank’s Head of Research and Economic Adviser Hyun Song Shin, meanwhile, described recent crypto market problems such as the collapse of the FTX exchange and stable coins TerraUSD and Luna as having similar characteristics to banking crashes.

He described many of the crypto coins sold as “DINO – decentralised in name only” and that most of their related activities took place through traditional intermediaries.

“This is people taking in deposits essentially in unregulated banks,” Shin said, adding it was largely about the unravelling of large leverage and maturity mismatches, just like during the financial crash more than a decade ago. (This story has been refiled to name BIS in the headline)

(Reporting by Marc Jones; Editing by Toby Chopra and Alexander Smith)