Coinz.com

(Reuters) – Trading firm Alameda Research is winding down operations, founder Sam Bankman-Fried said in a tweet on Thursday.

(Reporting by Niket Nishant in Bengaluru; Editing by Shinjini Ganguli)

By Herbert Lash and Harry Robertson

NEW YORK/LONDON (Reuters) – The dollar fell sharply on Thursday after U.S. consumer prices rose less than expected last month and data pointed to underlying inflation having peaked, opening the way for the Federal Reserve to slow its aggressive interest rate hikes.

The consumer price index rose 0.4% in October, the same increase in the prior month, the Labor Department said. Economists polled by Reuters had forecast the CPI would advance 0.6%.

Excluding volatile food and energy, core CPI increased 0.3% month-over-month after gaining 0.6% in September.

“A softer than expected inflation report is acting as a tailwind for markets. Every line of the report shows sequential improvement,” said Art Hogan, chief market strategist at B. Riley Wealth in New York.

“The good news is that we saw a significant sequential improvement, inflation is clearly moving in the right direction. And that keeps a more hawkish Fed at bay.”

The dollar index fell 1.495% and fed funds futures priced in a sharp decline in expectations for the Fed’s peak target rate, which fell below 5%. The likelihood of a 50% basis point hike by the Fed instead of 75 in December rose to 71.5%.

Annual inflation slowed as big increases last year drop out of the calculation for the index. CPI rose 7.7% in October on an annual basis, down from 8.2% the prior month, as headline inflation fell below 8% for the first time since February.

“The CPI report has reinforced the sell-off momentum in the dollar,” said MUFG currency strategist Lee Hardman.

“It gives the market more confidence that there could be a turn in the inflation cycle and the Fed could slow the rate hike pace in December.”

The euro rose 1.37% to $1.0148, while the Japanese yen strengthened 2.18% versus the dollar at 143.30.

The dollar had been on track for a second consecutive day of strong gains, with investors still waiting for the final results of U.S. mid-term elections on Tuesday, which will indicate whether the Democrats retain control of Congress.

The latest results showed Republicans were edging closer to securing a majority in the House of Representatives. Yet control of the Senate hung in the balance after Democrats performed better than expected. The dollar has surged more than 16% this year but lost some steam in recent weeks on hopes the Fed could begin reducing the size of its rate hikes after four consecutive increases by 75 basis points.

A crisis in the crypto world also hurt investor sentiment, analysts said. The Binance exchange on Wednesday abandoned a bailout deal of rival FTX, leaving FTX Chief Executive Sam Bankman-Fried scrambling to explore all options, with his company on the brink of collapse.

“I do think there’s been a bit of contagion from what’s been going on in crypto,” said Ray Attrill, head of FX strategy at National Australia Bank.

Rabobank’s Foley said a sell-off in crypto assets is likely to have boosted the dollar.

Bitcoin rose 10.08% to $17,478.00 after plunging in the previous session to less than $16,000 for the first time since late 2020. It has tumbled more than 60% this year.

FTX’s native token, FTT, was 96% higher for the day at $2.977, though its month-to-date loss stood around 90%.

(Reporting by Herbert Lash, additional reporting by Harry Robertson, Dhara Ranasinghe in London, Rae Wee in Singapore and Bansari Mayur Kamdar in Bengaluru; Editing by David Goodman and Mark Heinrich)

(Reuters) – Crypto investors need better protection in a space that is “significantly non-compliant” despite clear regulations, U.S. Securities and Exchange Commission Chair Gary Gensler said in an interview to CNBC on Thursday.

“The runway is running out. Investors around the globe are getting hurt,” he said while calling for cooperation from crypto companies.

The crypto industry continues to wobble due to fears of a possible collapse at FTX, one of the biggest digital asset exchanges in the world, after its bigger rival Binance abandoned a bailout deal for the company.

Gensler has for long argued the “Wild West” of crypto should be more actively regulated. He had in September suggested that companies that help transactions in the crypto market should register with the SEC and may need to split their operations into separate legal entities to mitigate conflicts of interest.

Months ago, the SEC began a probe of FTX.com’s handling of customers funds and its crypto lending activities.

(Reporting by Niket Nishant in Bengaluru)

LONDON (Reuters) – Crypto asset manager CoinShares has $30.3 million worth of exposure to crypto exchange FTX, CoinShares said in a statement on Thursday.

CoinShares said its exposure to FTX includes $3.1 million worth of bitcoin and $1.2 million worth of ether in pending withdrawals requests which were sent before FTX halted customer withdrawals on Nov. 8. Its exposure also includes $25.9 million worth of dollars and the stablecoin USDC, and $110,000 of unspecified “other assets.”

“The financial health of the Group remains strong,” said CoinShares CEO, Jean Marie Mognetti, adding that its net asset value on Sept. 30, 2022 was 240.6 million pounds ($279.10 million).

($1 = 0.8621 pounds)

(Reporting by Elizabeth Howcroft; Editing by Toby Chopra)

NEW YORK (Reuters) – FTX’s Sam Bankman-Fried told staff in a memo that he was seeking a capital raise and had held talks with Justin Sun, founder of the crypto token Tron, although did not want to imply anything about his chances of success.

In the memo, viewed by Reuters, Bankman-Fried said for the next week he would be “conducting a raise” to do right by customers and “possible new investors.”

Bankman-Fried told employees on Wednesday he was exploring all options for his firm after a deal with cryptocurrency exchange Binance collapsed.

(Reporting by Angus Berwick, writing by Megan Davies; Editing by Tomasz Janowski)

(This story from Nov. 9 has been refiled to correct hyphenation in headline)

HONG KONG (Reuters) – FTX CEO Sam Bankman-Fried has appealed for a $2 billion to $4 billion cash injection from OKX on Monday morning just prior to the announcement of the now collapsed acquisition mooted by arch rival Binance, said a senior executive at OKX.

The CEO of the troubled exchange had presented “a lot of urgency” in seeking that amount of cash injection during a call on November 8, as this would have helped FTX survive a short-term liquidity crisis, said Lennix Lai, director of financial markets at OKX.

The appeal for cash injection has come as FTX was facing a $7 billion total liability, said Lai, citing Bankman-Fried’s comment made in the call.

FTX has approached OKX for a deal as it needed to survive through a slew of withdrawal requests, Lai said, citing the several calls he had with Bankman-Fried on Nov. 8.

“If FTX does not get immediate cash injection, they would go bankrupt,” said Lai, he recalled their conversation during a later call at 7 a.m. Hong Kong time.

“Sam said he was talking with a few other potential investors, so he needed an urgent decison from us,” he said.

(Reporting by Georgina Lee; Editing by Jacqueline Wong)

(Reuters) – FTX has suspended onboarding of all new clients until further notice, according to the cryptocurrency exchange’s website on Thursday.

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

SINGAPORE (Reuters) – Broker Robinhood has no direct exposure to crypto exchange FTX, chief executive Vlad Tenev said on Twitter.

“Despite SBF having an equity stake in Robinhood, we have no direct exposure to Alameda, FTX, or any of its entities,” he wrote, referring to FTX CEO Sam Bankman-Fried. He said there were elevated trading volumes recently and that the last couple of days were “our two biggest days of crypto inflows ever.”

He did not quantify the flows. Cryptocurrency markets have been sliding as uncertainty swirls around the fate of FTX.

(Reporting by Tom Westbrook; Editing by Jacqueline Wong)

(Reuters) – Cryptocurrency exchange Kraken said on Thursday it was not affected by the recent FTX news “in any material way,” and that it had no exposure to FTX Chief Executive Officer Sam Bankman-Fried’s trading firm Alameda Research.

“We have not listed the FTT token on our spot or futures exchanges, and Kraken is not affected by the recent FTX news in any material way,” Kraken said, adding that it held about 9,000 FTT tokens on the FTX exchange.

CEO Bankman-Fried told employees that he was exploring all options for his firm after a deal with cryptocurrency exchange Binance collapsed on Wednesday.

(Reporting by Shivani Tanna in Bengaluru; Editing by Sherry Jacob-Phillips)

By Hannah Lang and Angus Berwick

NEW YORK (Reuters) – FTX Chief Executive Officer Sam Bankman-Fried told employees he was exploring all options for his firm after a deal with cryptocurrency exchange Binance collapsed on Wednesday.

The proposed deal between Bankman-Fried and rival Binance Chief Executive Officer Changpeng Zhao of Binance had been the latest emergency rescue in the world of cryptocurrencies this year, as investors pulled out from riskier assets in the wake of rising interest rates. The cryptocurrency market has fallen by about two-thirds from its peak to $1.07 trillion.

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com,” Binance said in a statement on Wednesday.

It leaves Bankman-Fried, 30, who had previously been throwing lifelines to other faltering digital asset platforms, with dwindling options himself.

“I’m working, as quickly as I can, on next steps here. I wish I could give you all more clarity than I can,” said Bankman-Fried, who is from California but lives in the Bahamas where FTX is based, in a message to FTX employees seen by Reuters.

Bankman-Fried, whose wealth was estimated at $17 billion as of September according to Forbes, had made billions arbitraging cryptocurrency prices in Asia beginning in 2017 before heading FTX.

Bankman-Fried said in the staff message his goals were to protect customers and provide any help he could for staff and investors.

“I’ll keep fighting for those (goals), as best as I can, as long as it’s correct for me to. I’m exploring all the options.”

Bankman-Fried also told employees that Binance had not previously expressed reservations about the deal.

“I’m deeply sorry that we got into this place, and for my role in it,” he wrote. “That’s on me, and me alone, and it sucks, and I’m sorry, not that it makes it any better.”

In a later message to staff, seen by Reuters and sent around 6pm Eastern Time (2300 GMT Wednesday), Bankman-Fried said: “I will post many more updates tonight, I promise.”

A representative for FTX did not immediately respond to a request for comment.

FTX.com is also facing scrutiny from U.S. regulators over its handling of customer funds, as well as its crypto-lending activities. The U.S. Securities and Exchange Commission is investigating crypto exchange FTX.com’s handling of customer funds amid a liquidity crunch, as well its crypto-lending activities, a source with knowledge of the inquiry said on Wednesday. Bloomberg first reported the probe.

Bloomberg also reported that the Department of Justice (DOJ) is looking into the turmoil and officials are working with SEC. A DOJ spokesperson declined to comment on the Bloomberg report.

FTX’s woes are the latest sign of trouble in the fast-moving world of cryptocurrencies where prices have slumped this year as a broader downturn in financial markets prompted investors to ditch riskier assets.

After rapid growth in 2020 and 2021, bitcoin is down more than 60% in 2022 and was last off 13% on the day at $16,277.

FTT, the smaller token tied to FTX, was down a further 67%, after collapsing 72% on Tuesday.

Investors in FTX have been hurt by the turmoil. Sequoia Capital said while its exposure to FTX is limited, it marked its investment down to zero.

“It has been a truly a devastating year for the industry,” said Ryan Wong, a senior researcher at crypto exchange Huobi. Wong said the turmoil in the industry would “lead to massive distrust from the public towards centralized establishments.”

LIQUIDITY CRUNCH

Speculation about FTX’s financial health that started over the weekend snowballed into $6 billion of withdrawals in the 72 hours before Tuesday morning. Binance revealed a proposal to acquire the rival exchange’s non-U.S. assets on Tuesday.

The deal to cover a “liquidity crunch” was non-binding and subject to further due diligence, leading some investors and analysts to question if it would go ahead.

The Wall Street Journal reported on Wednesday that Bankman-Fried told investors he needs emergency funding to cover up to $8 billion of withdrawal requests, citing sources familiar with the situation. FTX did not immediately respond to a request for comment.

Zhao earlier on Wednesday tweeted a letter to staff that there was no “master plan” behind the deal and that “FTX going down is not good for anyone in the industry” and is not a win.

Zhao also urged investors not to trade FTT tokens and to ignore the prices.

Binance had not been the only possible partner sought. Prior to the Binance proposed deal, Bankman-Fried approached cryptocurrency exchange OKX on Monday morning about a deal, but the exchange declined to move forward.

(Reporting by Hannah Lang and Angus Berwick; Selena Li, Tom Westbrook, Georgina Lee, Anshuman Daga and Vidya Ranganathan and Summer Zhen and Hannah Lang and Chris Prentice; editing by Megan Davies, Anna Driver and Shri Navaratnam)

(Reuters) – FTX Chief Executive Sam Bankman-Fried told investors on Wednesday that the cryptocurrency exchange needs an emergency funding to cover a shortfall of up to $8 billion due to withdrawal requests received in recent days, the Wall Street Journal reported, citing people familiar with the matter.

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

(Reporting by Aishwarya Nair in Bengaluru; Editing by Maju Samuel)

WASHINGTON (Reuters) – The cryptocurrency industry events of the last few days highlight the risks in the industry of co-mingling of intermediary functions, the chair of the U.S. Securities and Exchange Commission said on Wednesday.

“In our tie-tested public policy, we separate out these functions,” SEC Chair Gary Gensler said in remarks at a Healthy Markets Association event.

Concerns over the health of major cryptocurrency exchange FTX sent the cryptocurrency markets into a tailspin this week.

(Reporting by Chris Prentice; Editing by Chris Reese)

(Reuters) – Gemini cofounder Cameron Winklevoss assured investors that the crypto exchange has no exposure to FTX, digital coin FTT and crypto trading platform Alameda, as a liquidity crunch at FTX sparks concerns of another crypto contagion.

FTX, which developed a penchant for bailing out troubled crypto firms, saw investors express concerns about its financial health that led its token FTT to shed another 50% on Wednesday after wiping out 72% a day earlier.

“For the avoidance of doubt, Gemini has no exposure to FTT tokens or Alameda and no material exposure to FTX,” Winklevoss wrote in a tweet on Wednesday.

Gemini joins cryptocurrency exchange Coinbase Global Inc which also pacified investors on Tuesday.

(Reporting by Mehnaz Yasmin in Bengaluru; Editing by Shailesh Kuber)

By Herbert Lash

NEW YORK (Reuters) – World stocks slid below recent seven-week highs and the dollar rose on Wednesday as investors awaited both the results of the U.S. mid-term elections and key data on consumer prices that could impact the Federal Reserve’s policy on interest rates.

Bitcoin, the biggest cryptocurrency by market value, fell 9.81% to $16,730.00 amid concerns about the stability of the sector after a “liquidity crunch” led major exchange FTX into a potential deal with rival Binance.

The Wall Street Journal reported that Binance would likely walk away from the deal, citing a source familiar with the situation.

Stocks in Europe and on Wall Street fell. Neither Democrats or Republicans were likely to gain control of both chambers of Congress, which muddied the outlook for fiscal spending and regulation.

“The market is going to get what it wants: it’s going to get divided government. It means gridlock is the agenda item for the next two years,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.

“It’s not going to seriously alter spending, but it’s also going to block any material increases in spending,” he said.

Stock markets have tended to perform better under a split government when a Democrat is in the White House.

Average annual S&P 500 returns have been 14% in a split Congress and 13% in a Republican-controlled Congress under a Democratic president, according to data since 1932 analyzed by RBC Capital Markets. That compares with 10% when Democrats controlled both the presidency and Congress.

Asian shares edged up as the election results rolled in overnight. But MSCI’s all-country world index shed 1.41% and the pan-European STOXX 600 index closed down 0.30%.

On Wall Street, the Dow Jones Industrial Average fell 1.6%, the S&P 500 slid 1.74% and the Nasdaq Composite dropped 2.16%.

Post-midterm perfection for U.S. stocks https://graphics.reuters.com/USA-STOCKS/MIDTERMS/gdpzqrdoqvw/chart.png

Walt Disney tumbled 12.54% after the entertainment heavyweight reported more losses from its push into streaming video, while Meta Platforms Inc gained 5.70% after the Facebook parent said it would cut 13% of its workforce.

Investors cheered Meta’s decision to reduce spending, but a weak advertising market for the company points to a difficult economic outlook as the Fed hikes rates to tame high inflation.

Data on the U.S. consumer price index (CPI) is due on Thursday, with economists polled by Reuters forecasting a decline in both the monthly and yearly core numbers for October to 0.5% and 6.5%, respectively.

Many in the market believe the U.S. central bank can reduce its target lending rate if data shows inflation ebbing, but others see it moving “higher for longer” as Fed Chair Jerome Powell indicated last week.

“I take Chairman Powell at his word. He’s been telling markets all along that he needs to raise rates, which suggests to me that there are a number of rate hikes still in the works from the Fed,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

“Clearly investors are hoping that the rate of inflation begins to roll over, and if that does not happen, I do think that causes some additional volatility in markets,” he said.

Federal fund futures show the Fed’s target rate will peak at 5.096% next June, indicating policymakers must hike rates by more than 125 basis points from their current 3.75%-4.0% range.

The euro was lower, down 0.65% to $1.0007, just off the $1.0096 hit overnight, its highest since Sept. 13.

The yen weakened 0.61% versus the dollar at 146.59, after weakening overnight to 145.17, its lowest level against the Japanese currency this month.

The yield on 10-year Treasury notes was up 2.3 basis points to 4.151%.

Oil prices sank after industry data showed U.S. crude stockpiles rose more than expected and on concerns a rebound in COVID-19 cases in top importer China would hurt fuel demand.

U.S. crude futures fell $3.08 to settle at $85.83 a barrel and Brent futures settled down $2.71 to $92.65.

Gold dipped as an uptick in the dollar nudged bullion prices off a more than one-month high.

U.S. gold futures settled 0.1% lower at $1,713.70.

(Reporting by Herbert Lash, additional eporting by Dhara Ranasinghe, Nell Mackenzie and Lucy Raitano in London, Ankur Banerjee in Singapore; Editing by Toby Chopra, Bernadette Baum, Deepa Babington and Alex Richardson)

(Reuters) – Two top U.S. financial regulators are probing whether crypto exchange FTX.com properly handled customers’ funds, and its relationship with other parts of Sam Bankman-Fried’s crypto empire, Bloomberg News reported on Wednesday.

The Securities and Exchange Commission and the Commodity Futures Trading Commission are probing FTX.com’s relationship with its American counterpart FTX U.S. and Bankman-Fried’s trading firm Alameda Research, the report said.

The report, citing people familiar with the matter, comes a day after crypto exchange Binance said it would acquire FTX.com.

A CFTC spokesperson declined to comment. The SEC and FTX.com did not immediately respond to Reuters’ requests for comment.

(Reporting by Niket Nishant in Bengaluru; Editing by Maju Samuel)

(Reuters) – Binance, the world’s biggest cryptocurrency exchange, on Tuesday signed a non-binding agreement to buy rival FTX’s non-U.S. unit.

The move is the latest and potentially largest bailout in the crypto world, and investors are on edge about how the shakeout might re-shape the trading landscape.

Here is a list of the biggest crypto exchanges in terms of volume this year, according to analytics website CoinGecko.

Exchange Volume YTD (USD)

Binance $4.953 trillion

OKX $960.93 billion

UpBit $800.00 billion

Coinbase $775.09 billion

FTX $626.69 billion

KuCoin $554.87 billion

Crypto.com $453.96 billion

Huobi $452.62 billion

Gate.io $433.83 billion

Kraken $237.48 billion

GRAPHIC: Top crypto exchanges by volume https://graphics.reuters.com/FINTECH-CRYPTO/jnpwygnndpw/chart.png

(Compiled by Harish Sridharan in Bengaluru and Tom Westbrook in Singapore; Editing by Bradley Perrett)

By Hannah Lang

(Reuters) – FTX CEO Sam Bankman-Fried approached cryptocurrency exchange OKX Monday morning about a deal before he announced Tuesday that Binance had signed a nonbinding agreement to acquire FTX in the face of an apparent liquidity crunch, an OKX spokesperson said.

Although Bankman-Fried did not name a dollar amount, OKX declined to move forward with a deal, expressing concern that the consolidation of exchanges would be a step backward for the industry, the spokesperson said.

The deal between Bankman-Fried and Binance CEO Changpeng Zhao, known by his initials CZ, came as speculation about FTX’s financial health snowballed into $6 billion of withdrawals in the 72 hours before Tuesday morning.

The pressure on FTX came in part from Zhao, who had tweeted on Sunday that Binance would liquidate its holdings of the rival’s token, called FTT, due to unspecified “recent revelations.”

OKX leadership encouraged Bankman-Fried to “work things out with CZ,” arguing that it would be better if CZ agreed not to sell Binance’s FTT holdings “instead of making a monopolistic sale,” the spokesperson added.

Neither OKX or its sister exchange OKCoin, which is available to U.S. customers, had any exposure to FTX or Bankman-Fried’s crypto trading firm Alameda Research.

(Reporting by Hannah Lang in Washington; Editing by Chizu Nomiyama)

By Vidya Ranganathan

SINGAPORE (Reuters) – It’s no joke. Elon Musk’s acquisition of Twitter has put fresh wind in the sails of dogecoin, the meme cryptocurrency he catapulted to fame.

Dogecoin’s price doubled after the Tesla tycoon completed the $44 billion deal. It was trading at about $0.07 on Oct. 27 before Musk tweeted “the bird is freed” to announce his ownership. Five days later, it was at $0.16.

That may not sound like much, but it gave the highly volatile cryptocurrency a market value of $21 billion, according to data platform CoinGecko.

Not bad for a coin that was created as a “joke” satirizing wild speculation in the crypto market and named after an internet meme of a Shiba Inu dog.

“Trading dogecoin around Elon tweets has become a lucrative form of speculation,” said Matthew Dibb, chief operating officer of Singapore-based crypto investment manager Stack Funds.

Musk has indeed played a big role in the rise of dogecoin since its lighthearted launch by two software engineers in 2013. His tweets expressing support for the coin, including one calling it the “people’s crypto”, helped its price come from almost nowhere to surge about 4,000% in 2021.

Crypto watchers said the latest price jump, following the Twitter deal, was fuelled by investor bets that Musk would make doge a part of the platform’s payments system.

“There’s a lot of speculation that Twitter will provide a test bed for doge adoption and experimentation for different uses,” Dibb added.

GRAPHIC: Musk’s love for dog tokens https://graphics.reuters.com/FINTECH-CRYPTO/WEEKLY/byprlowobpe/chart.png

DOGE AND SHIB

Dogecoin has since lost some of its gains and is hovering at about $0.12, which makes it the eight-biggest cryptocurrency, with a market cap of around $16 billion, according to CoinGecko.

The so-called meme coin hit a peak of $0.63 in May last year, but macro gloom and investor apathy to risky markets have since crushed it along with other prominent crypto assets such as bitcoin and ether. Even after the latest rally, doge is down 57% in the past 12 months.

Nonetheless, crypto market news website Coindesk said the doubling of its price had made doge the top performer among 150 digital assets in its CoinDesk Market Index in October.

Its share of the $1 trillion global crypto market cap through the year until the end of October was 1%, a fraction of bitcoin’s 39%, according to CoinMarketCap. Now it’s at 1.58%.

Doge has lifted other dog-themed coins in its wake, chiefly Shiba Inu, which has the same motif of the Japanese canine breed as doge and is designed to be compatible on the Ethereum blockchain. Shib, which trades at just $0.00001, jumped by a third in the days after Musk closed the Twitter deal.

Unlike bitcoin, both doge and shib have near unlimited supplies, meaning it would take more than mere speculative hoarding to drive their prices up.

AT MERCY OF MUSK?

Bets that Musk may allow crypto payments with dog tokens were kindled by his tweet last week of a picture of the Shiba Inu dog wearing a Twitter T-shirt.

Yet the early rally has stalled, with many crypto investors stumped about how serious he really is about dogecoin.

Musk, the world’s richest person, called dogecoin a “hustle” on a talkshow in May last year, for instance, sending the price tumbling.

Then in January this year, Tesla started accepting dogecoin as payment for its merchandise, such as the “Giga Texas” belt buckles and mini models of electric vehicles.

Musk’s newly launched perfume “Burnt Hair” can also be bought with doge.

(Reporting by Vidya Ranganathan; Editing by Pravin Char)

(Reuters) – Crypto financial services company Galaxy Digital Holdings Ltd said on Wednesday it would cut its exposure to embattled crypto exchange FTX by $47.5 million.

Galaxy, founded by Mike Novogratz, disclosed it had a $76.8 million exposure to the company, a day after Binance said it was planning to buy smaller rival FTX.

Major cryptocurrencies fell after the announcement, as investors were left wondering if the financial instability at FTX could spread to other players in the industry.

Coinbase Global Inc and USD Coin issuer Circle Financial have reassured investors of minimal exposure to FTX.

(Reporting by Niket Nishant in Bengaluru; Editing by Vinay Dwivedi)

By Hannah Lang

(Reuters) – The cryptocurrency industry has spent millions of dollars on U.S. midterm election races during a year of heavy losses and upheaval in the sector, which hopes to gain sway among legislators as Congress debates tighter regulation of digital assets.

Crypto evangelists view 2023 as a critical year for regulation, with Congress expected to make progress on legislation on digital commodities and stablecoins, a type of cryptocurrency pegged to the U.S. dollar. Crypto companies are eager to back industry-friendly political candidates.

The election comes at a time of turmoil for the crypto industry. Bitcoin’s price has swooned about 70% from its peak, investors are more worried about the risk of crypto assets and on Tuesday, crypto giant Binance tentatively agreed to buy FTX’s non-U.S. unit to help the rival exchange cover a “liquidity crunch.”

WHO IN CRYPTO IS SPENDING MONEY ON THE MIDTERM ELECTIONS?

FTX’s CEO Sam Bankman-Fried has far outspent all others in the crypto industry. His contributions of nearly $40 million to campaigns this election cycle make him the sixth-largest individual donor in the United States, according to OpenSecrets’ biggest individual donor list.

The vast majority of his spending was in support of Democrats, according to OpenSecrets.

The deal with Binance announced by Bankman-Fried on Tuesday marked an abrupt change in fortune for the crypto entrepreneur.

Ryan Salame, CEO of an FTX subsidiary, was the 14th biggest individual donor on the list, giving more than $23.6 million, all to Republicans, including $11,600 backing the campaign of Rep. Alex Mooney, a Republican from West Virginia.

FTX did not respond to a Reuters request to confirm those figures.

Skybridge Capital, the digital asset investment management firm founded by former Trump White House communications director Anthony Scaramucci, contributed $100,000 to the Crypto Innovation super PAC this year, as did Scaramucci himself.

“The people have spoken: they believe in the promise of blockchain technology, they want more financial inclusion, and they’re demanding that policymakers listen. That’s why, at SkyBridge, we’ve made such a big bet on cryptocurrency — and just as importantly, on the underlying blockchain technology,” a Skybridge spokesperson said.

WHICH CANDIDATES ARE GETTING MONEY FROM CRYPTO?

Lawmakers who have taken an interest in codifying crypto legislation, as well as leaders of influential committees, have received cash from crypto-related PACs.

Two of the largest public crypto companies in the United States, Coinbase and Robinhood, also have PACs which spent more than $11,000 and $44,000 respectively leading up to the midterm elections, according to FEC data and confirmed by the companies.

Coinbase, Robinhood and industry trade group Chamber of Digital Commerce all had their PACs donate to Rep. Patrick McHenry, FEC records show. As the top Republican serving on the House Financial Services Committee, McHenry is likely to become its chairman if Republicans win control of the House of Representatives. The Chamber of Digital Commerce did not respond to a request to confirm its contributions.

The Crypto Innovation super PAC spent at least $167,000 supporting McHenry’s re-election campaign by paying for ads and direct mail campaigns. The group did not respond to a request to confirm its contributions.

Coinbase, the Chamber of Digital Commerce and crypto-focused HODLpac donated to Sen. Ron Wyden, the Democratic chair of the Senate Finance Committee, according to FEC records. Crypto Innovation PAC spent more than $356,000 on independent expenditures supporting Sen. John Boozman, the top Republican on the Senate Agriculture Committee.

WHAT IS THE CRYPTO INDUSTRY LOOKING TO GET IN RETURN?

Crypto firms may hope to influence laws as policymakers push forward digital asset legislation in the coming months.

McHenry and Rep. Maxine Waters, a Democrat who now chairs the House Financial Services Committee, are in talks over a bipartisan stablecoin bill. Though details have yet to be finalized, most analysts view stablecoins as the easist crypto issue for lawmakers to tackle.

Crypto companies such as Circle want lawmakers to create a framework for stablecoins to help mature the industry and codify consumer protections. Currently, there is no federal regulator that oversees stablecoins.

Boozman and Stabenow, along with Senators Cory Booker and John Thune, have introduced the Digital Commodities Consumer Protection Act of 2022, a bipartisan bill that would provide more authority to the CFTC to regulate cryptocurrency.

Some in crypto, like Ryan Selkis, founder and CEO of crypto market intelligence firm Messari, have expressed concern that the bill would pose an existential threat to decentralized finance (DeFi), requiring decentralized crypto exchanges to registesr with the Commodities Futures Trading Commission (CFTC).

The DeFi proponents in particular, and crypto companies more broadly, are likely hoping that their campaign contributions will help them make their case to the election winners.

(Reporting by Hannah Lang in Washington; Editing by Lananh Nguyen and Megan Davies and David Gregorio)