Tag: Cryptocurrencies

WILMINGTON, Del. (Reuters) – U.S. prosecutors are in the process of seizing shares of Robinhood Markets Inc that were allegedly owned by an entity controlled by Sam Bankman-Fried, who has been charged with fraud in the collapse of the FTX cryptocurrency exchange, U.S. attorneys told a judge on Wednesday.

Prosecutors told a U.S. bankruptcy judge they are in the process of seizing shares of Robinhood, the popular securities trading app, that were pledged as loan collateral by Alameda Research, the crypto hedge fund founded by Bankman-Fried.

Alameda filed for U.S. bankruptcy in November along with its affiliate FTX after customers rushed to withdraw funds.

Bankman-Fried has pleaded not guilty to fraud over the loss of potentially billions of dollars by FTX customers, investors and lenders.

Bankman-Fried owned about 56 million shares or about 7.42% of Robinhood stock through Emergent Fidelity Technologies Ltd, according to Eikon data.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Sandra Maler)

By Jack Queen

(Reuters) – FTX founder Sam Bankman-Fried pleaded not guilty in Manhattan federal court on Tuesday to fraud and other charges related to the collapse of his $32 billion crypto empire, with a judge setting an October trial date as both sides prepare to sift through mountains of evidence.

WHAT HAPPENS NEXT?

The government will give documents and evidence to Bankman-Fried’s lawyers in a process known as discovery. Prosecutors said on Tuesday that they have hundreds of thousands of documents with more on the way as they continue gathering evidence. Discovery can take months, particularly if disputes arise over what evidence the defense is entitled to see ahead of trial. The documents could include everything from emails to bank statements and internal FTX data.

IS THE INVESTIGATION ONGOING?

Yes. Manhattan U.S. Attorney Damian Williams has said his office will continue to make announcements as its probe widens. In December, he revealed that Bankman-Fried associates Caroline Ellison and Gary Wang had pleaded guilty to defrauding investors and agreed to cooperate with prosecutors. Williams has pointedly urged any FTX insiders with information about the company’s demise to come forward.

WHEN WILL THE TRIAL HAPPEN?

U.S. District Judge Lewis Kaplan set an Oct. 2 trial date, but it is not uncommon for the schedule to be pushed back as fresh legal issues and evidence surface. Pretrial litigation is critically important as both sides press for an advantage over what evidence jurors will see and what legal arguments may be presented to them. Neither side gave any indication on Tuesday that they expect significant delays, but legal experts say similar cases have taken a year or longer to reach juries.

IS BANKMAN-FRIED CERTAIN TO STAND TRIAL?

No. Criminal defendants can change their plea at any time, and their lawyers often negotiate with prosecutors over a possible plea deal. This typically entails a defendant pleading guilty to certain charges in exchange for prosecutors dropping others.

Bankman-Fried, 30, has not given any indication that he intends to strike a plea deal, and prosecutors have not indicated they would offer one. He has apologized to FTX customers but said he does not believe he is criminally liable.

WHAT HAPPENS IF BANKMAN-FRIED IS CONVICTED?

The ex-mogul faces a maximum of 115 years in prison, but he is unlikely to receive such a sentence even if he is convicted on all counts. Judges have discretion in deciding sentences, and after a verdict, prosecutors and the defense frequently argue over an appropriate penalty. This involves weighing mitigating and aggravating factors or reasons why a defendant deserves a lenient or severe sentence.

WHAT ABOUT THE FTX BANKRUPTCY CASE?

FTX declared bankruptcy on Nov. 11 in Delaware. The U.S.-based bankruptcy is still in its early stages and will proceed without Bankman-Fried’s direct involvement.

The company’s current CEO, John Ray, told members of U.S. Congress in December that efforts by FTX to recover customers’ crypto assets would continue. Bankman-Fried has had no role in the company after he stepped down in November, Ray said.

(Reporting by Jack Queen in New York; Additional reporting by Dietrich Knauth in New York; Editing by Noeleen Walder and Matthew Lewis)

WASHINGTON (Reuters) – U.S.-based cryptocurrency exchange Coinbase Global Inc has reached a $100 million settlement with New York’s Department of Financial Services (DFS), the exchange and the regulator said in statements on Wednesday.

The settlement, which includes a $50 million penalty, caps the regulator’s investigation into the firm’s compliance with requirements to prevent money laundering.

The department found Coinbase treated its onboarding requirements for customers as a “simple check-the-box” and had not done sufficient background checks, the regulator said.

“Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth. That failure exposed the Coinbase platform to potential criminal activity,” said New York DFS Superintendent Adrienne Harris.

The exchange has addressed the problems, said Paul Grewal, Coinbase’s chief legal officer, in a statement.

In a blog post, Coinbase said the investigation centered on the company’s compliance program circa 2018 and 2019, as well as the compliance backlogs as the exchange grew in 2021.

“We took NYDFS’s concerns seriously and have taken substantial measures to address these historical shortcomings,” the blog post said.

Coinbase, a publicly traded firm and one of the largest global crypto exchanges, will pay another $50 million to boost compliance efforts aimed at blocking potential criminals from using the exchange, the company said. The deal also requires Coinbase to work with a third-party monitor.

The New York Times first reported the settlement.

Coinbase has been under scrutiny from DFS and other regulators. It has previously disclosed receiving investigative subpoenas and requests from the U.S. Securities and Exchange Commission for documents and information.

Read more:

U.S. Supreme Court agrees to hear Coinbase arbitration dispute

Coinbase CEO expects revenue to plunge over 50% on battered crypto prices

(Reporting by Susan Heavey, Hannah Lang and Jonathan Stempel; Additional reporting and writing by Chris Prentice; Editing by Mark Potter and Lisa Shumaker)

By Jonathan Stempel

NEW YORK (Reuters) – A former chief financial officer of multiple special purpose acquisition companies (SPACs) has pleaded guilty to embezzling more than $5 million from them, and losing almost all of it trading meme stocks and cryptocurrencies.

Cooper Morgenthau, 35, of Fernandina Beach, Florida, pleaded guilty to one count of wire fraud on Tuesday before U.S. District Judge Paul Engelmayer in Manhattan federal court.

Morgenthau faces a possible prison sentence of about six to 7-1/4 years, under recommended federal guidelines, at his scheduled April 25 sentencing.

He also agreed to forfeit $5.11 million and pay an equal amount in restitution, and settled related civil charges by the U.S. Securities and Exchange Commission.

Michael Bowen, a lawyer for Morgenthau, declined to comment.

Authorities said that between June 2021 and August 2022, Morgenthau stole more than $1.2 million from African Gold Acquisition Corp, concealed the theft by falsifying its account statements, and spent or lost all of it in securities trading.

To cover his losses, Morgenthau then raised $4.7 million from investors in SPACs known as Strategic Metals Acquisition Corp, only to lose most of it through crypto trading, the SEC said.

African Gold, which is based in New York and was created to buy a gold mining business, had raised $414 million in a Feb. 2021 initial public offering.

It fired Morgenthau last August after he ran out of money and vendors refused to work for the company, the SEC said.

African Gold said at the time it terminated Morgenthau after learning about his “improper withdrawals” and attempts to conceal them.

In pleading guilty, Morgenthau “admitted that he breached the trust that he owed to his public and private investors,” U.S. Attorney Damian Williams in Manhattan said in a statement.

(Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis)

(Reuters) – The Securities Commission of the Bahamas (SCB) rebuffed on Monday FTX’s claims about the digital assets of its Bahamas unit held by the regulator, saying the debtors of the bankrupt cryptocurrency exchange had “incomplete information”.

Last month, the SCB said it had seized more than $3.5 billion in cryptocurrency from the unit, FTX Digital Markets, which it was holding for future repayment to customers and other creditors.

FTX disputed SCB’s calculations, saying its digital assets seized in November were worth just $296 million and not $3.5 billion.

“Such public assertions by the Chapter 11 debtors were

based on incomplete information,” the regulator said in a statement on Monday.

There was no immediate response from FTX, which has been at odds with Bahamian officials since filing for bankruptcy protection on Nov. 11.

Bahamas officials have sought access to FTX’s records to help liquidate FTX Digital Markets, but the company’s U.S. bankruptcy team said it did not trust them with the information.

FTX’s founder and former chief executive, Sam Bankman-Fried, was arrested on fraud charges and is expected to be arraigned on Tuesday before U.S. District Judge Lewis Kaplan in Manhattan federal court.

The firm’s new chief executive, John Ray, has said the exchange lost $8 billion of customer money.

(Reporting by Kanjyik Ghosh in Bengaluru; Editing by Clarence Fernandez)

By Jack Queen and Luc Cohen

NEW YORK (Reuters) – Sam Bankman-Fried pleaded not guilty on Tuesday to criminal charges that he cheated investors in his now-bankrupt FTX cryptocurrency exchange.

Bankman-Fried is accused of looting billions of dollars in FTX customer deposits to support his Alameda Research hedge fund, buy real estate and make millions of dollars in political contributions, in what prosecutors have called a fraud of epic proportions.

The 30-year-old defendant entered his plea through his lawyer to eight criminal counts, including wire fraud and conspiracy to commit money laundering, before U.S. District Judge Lewis Kaplan in Manhattan federal court.

It is common for criminal defendants to initially plead not guilty. They may change their pleas later.

Bankman-Fried, now clean-shaven, had entered the courthouse while wearing a blue suit, white shirt and dotted blue tie and carrying a backpack.

He could face up to 115 years in prison if convicted.

The Massachusetts Institute of Technology graduate rode a boom in the value of bitcoin and other digital assets to build a net worth of an estimated $26 billion and become an influential political donor in the United States.

But FTX collapsed in early November after a wave of withdrawals and declared bankruptcy on Nov. 11, wiping out Bankman-Fried’s fortune. He later said he had $100,000 in his bank account.

Bankman-Fried was extradited last month from the Bahamas, where he lived and where the exchange was based.

Since his release on bond on Dec. 22, Bankman-Fried has been subject to electronic monitoring and required to live with his parents, Joseph Bankman and Barbara Fried, both professors at Stanford Law School in California.

The prosecution case was strengthened by last month’s guilty pleas of two of Bankman-Fried’s closest associates.

Caroline Ellison, who was Alameda’s chief executive, and Gary Wang, FTX’s former chief technology officer, pleaded guilty to seven and four criminal charges, respectively, and agreed to cooperate with prosecutors.

Bankman-Fried, Ellison and Wang were also sued by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. Ellison and Wang settled those civil cases.

FTX’s new chief executive, John Ray, known for his work on energy company Enron Corp’s bankruptcy, has said FTX was run by “grossly inexperienced” and unsophisticated people.

(Reporting by Jack Queen and Luc Cohen in New York; Additional reporting by Jonathan Stempel in New York; Editing by Noeleen Walder and Matthew Lewis)

(Reuters) – U.S. banking regulators said on Tuesday banks should be aware of key risks associated with cryptocurrency, including legal uncertainties and inaccurate or misleading disclosures by digital asset firms.

In their first joint statement on crypto, the Federal Reserve, Federal Deposit Insurance Corp and the Office of the Comptroller of the Currency also said banks issuing or holding crypto tokens that are stored on a public, decentralized network are “highly likely” to be inconsistent with safe and sound banking practices.

The regulators also said they have safety and soundness concerns with bank business models that have concentrated exposure to the crypto sector, or those that are highly concentrated in crypto-related activities.

(Reporting by Hannah Lang in Washington; Editing by Chris Reese)

NEW YORK (Reuters) – Sam Bankman-Fried’s parents have been getting physical threats since the collapse of their son’s now-bankrupt FTX cryptocurrency exchange, his lawyers said on Tuesday.

The disclosure was made in a filing in Manhattan federal court, where the lawyers asked that the names of two remaining sureties for Bankman-Fried’s $250 million bond not be disclosed.

Bankman-Fried has been required to live with his parents, Joseph Bankman and Barbara Fried, with electronic monitoring since bail conditions were set.

In Tuesday’s filing, his lawyers said the parents “have in recent weeks become the target of intense media scrutiny, harassment, and threats. Among other things, Mr. Bankman-Fried’s parents have received a steady stream of threatening correspondence, including communications expressing a desire that they suffer physical harm.”

As a result, the lawyers said there was “serious cause for concern” the additional sureties might face similar privacy intrusions, threats and harassment, and that this overcame any public right of access to their identities.

Bankman and Fried are professors at Stanford Law School.

They agreed to co-sign their son’s bond, with the additional sureties signing separate bonds in lower amounts.

Bankman-Fried is expected to plead not guilty later on Tuesday to criminal charges that he cheated investors and looted billions of dollars at FTX, a source familiar with the matter said last week.

He is accused of illegally using FTX customer deposits to support his Alameda Research hedge fund, buy real estate and make millions of dollars in political contributions.

(Reporting by Jonathan Stempel in New York; Editing by Tomasz Janowski)

(Reuters) – Cameron Winklevoss, who founded crypto exchange Gemini Trust Co with his twin brother, on Monday accused Digital Currency Group (DCG) CEO Barry Silbert of “bad faith stall tactics” and asked him to commit to resolving $900 million worth of disputed customer assets by Jan. 8.

Gemini has a crypto lending product called Earn in partnership with DCG’s crypto firm Genesis. Genesis halted customer withdrawals in November, following the collapse of major crypto exchange FTX.

Winklevoss said Genesis owed more than $900 million to some 340,000 Earn investors, and that he had been trying to reach a “consensual resolution” with Silbert for the past six weeks.

“However, it is now becoming clear that you have been engaging in bad faith stall tactics,” Winklevoss wrote in an open letter to Silbert that was posted on Twitter.

“We are asking you to publicly commit to working together to solve this problem by January 8th, 2023,” he added. The letter did not say what would happen if an agreement was not reached by Jan. 8.

Winklevoss wrote that DCG owed Genesis $1.675 billion, which was money that Genesis in turn owed to Earn users and other creditors, adding “this mess is entirely of your own making.”

Silbert responded in a tweet that DCG did not borrow $1.675 billion from Genesis.

“DCG has never missed an interest payment to Genesis and is current on all loans outstanding,” Silbert said, adding that DCG delivered a proposal to Genesis and Winklevoss’ advisers on Dec. 29 and did not receive a response.

Genesis wrote in a letter to clients on Dec. 7 that it was working to preserve client assets and strengthen liquidity, adding that it would take “weeks rather than days” to form a plan.

(Reporting by Mrinmay Dey in Bengaluru; Editing by Tiffany Wu and Matthew Lewis)

By Dietrich Knauth

(Reuters) – Binance’s $1 billion acquisition of bankrupt crypto lender Voyager Digital could be delayed or blocked by a U.S. national security review, according to a Friday bankruptcy court filing.

    The crypto exchange’s U.S.-based affiliate Binance.US intends to buy Voyager’s crypto lending platform with a bid that includes $20 million in cash and crypto assets that will be used to repay Voyager’s customers.

But the U.S. Committee on Foreign Investment in the United States (CFIUS), an interagency body that vets foreign investments into U.S. companies for national security risks, said Friday that its review “could affect the ability of the parties to complete the transactions, the timing of completion, or relevant terms.”

Attorneys for Voyager and Binance.US did not immediately respond to requests for comment Friday.

CFIUS has increasingly been used by Washington as a tool to stymie Chinese investment in the United States.

Binance, is owned by Chinese-born and Singapore-based Changpeng Zhao and has no permanent headquarters. The company has been the subject of a money laundering probe by U.S. prosecutors. Binance.US, based in Palo Alto, California, has said that its separate American exchange is “fully independent” of the main Binance platform.

CFIUS did not mention any specific security concerns raised by the Voyager acquisition in its court filing, but it said that bankruptcy courts have sometimes ruled that national security concerns can prevent a company from bidding on assets in bankruptcy.

Voyager filed for bankruptcy in July, months after the crash of major crypto tokens TerraUSD and Luna sent shockwaves across the digital asset industry.

Voyager initially planned to sell its assets to FTX Trading, but that deal imploded when FTX went bankrupt in November amid a frenzy of customer withdrawals and fraud allegations that led to the arrest of founder Sam Bankman-Fried.

(Reporting by Dietrich Knauth)

(Reuters) – FTX on Friday disputed the Securities Commission of the Bahamas’ claims that the regulator was holding $3.5 billion of the bankrupt cryptocurrency exchange’s assets.

When the digital assets of FTX were transferred to the regulator in November, their value was just $296 million, FTX said in a statement.

(Reporting by Niket Nishant in Bengaluru; Editing by Shailesh Kuber)

(Reuters) – Federal prosecutors are looking into a series of crypto transactions that online analysts have tied to digital wallets associated with Sam Bankman-Fried, Bloomberg News reported on Friday, citing a person familiar with the matter.

Prosecutors from the Southern District of New York (SDNY) are looking at whether Bankman-Fried, if he’s making the transactions, is just moving around his own assets or cashing them out without approval, the report said.

A spokesperson for the Manhattan U.S. attorney’s office and an attorney for Bankman-Fried did not respond immediately to Reuters requests for comment.

Bankman-Fried, the former chief executive officer of bankrupt crypto exchange FTX, tweeted that he was not behind the transactions.

“I’m not and couldn’t be moving any of those funds; I don’t have access to them anymore,” he said.

(Reporting by Niket Nishant in Bengaluru; Editing by Shailesh Kuber)

By Jack Queen

NEW YORK (Reuters) – Sam Bankman-Fried is expected on Tuesday to enter an initial plea of not guilty to criminal charges that he cheated investors and looted billions of dollars at his now-bankrupt FTX cryptocurrency exchange, according to a source familiar with the matter.

Bankman-Fried is accused of illegally using FTX customer deposits to support his Alameda Research hedge fund, buy real estate and make millions of dollars in political contributions.

He is scheduled to appear at 2 p.m. EST (1900 GMT) on Tuesday before U.S. District Judge Lewis Kaplan in Manhattan to enter a plea.

A lawyer for Bankman-Fried did not immediately reply to a request for comment.

Bankman-Fried has been free on $250 million bond following his extradition last month from the Bahamas, where he lived and where the exchange was based.

Since his release, Bankman-Fried has been subject to electronic monitoring and required to live with his parents, both professors at Stanford Law School in California.

The Massachusetts Institute of Technology graduate has been charged with two counts of wire fraud and six conspiracy counts, including to launder money and commit campaign finance violations. He could face up to 115 years in prison if convicted.

Bankman-Fried has admitted to making mistakes running FTX but said he did not believe he was criminally liable.

(Reporting by Jack Queen; Editing by Noeleen Walder and Daniel Wallis)

(Reuters) – The Securities Commission of the Bahamas said on Thursday that it is holding FTX assets worth $3.5 billion based on market pricing at the time of transfer on a temporary basis to deliver them to customers and creditors who own them.

FTX’s Bahamas unit’s digital assets were transferred to digital wallets under the exclusive control of the commission in November soon after the company and its hedge fund Alameda Research and dozens of affiliates filed for U.S. bankruptcy.

Upon completion of the transfer, FTX founders Sam Bankman-Fried and Gary Wang no longer had access to the tokens that were transferred or frozen, the executive director of the commission, Christina Rolle, said in an affidavit filed with the Bahamas Supreme Court.

“All transferred assets were and remain under the sole control of the commission,” Rolle said.

Lawyers for crypto exchange FTX earlier this month opposed a demand for internal records from its Bahamian business, saying they “do not trust” the Bahamian government with data that could be used to siphon off assets from the bankrupt company.

The authorities in the Bahamas, where the company had its headquarters, appointed liquidators to wind down FTX’s international trading business soon after the company announced bankruptcy.

(Reporting by Urvi Dugar and Akanksha Khushi in Bengaluru; Editing by Leslie Adler)

By Dietrich Knauth

(Reuters) – A group of FTX customers from outside the United States have asked a U.S. bankruptcy judge to keep their names secret during the cryptocurrency exchange’s bankruptcy case, saying that revealing their identities could expose them to identity theft and other scams.

Bankrupt companies typically reveal the names and amounts of debt held by their creditors, including individual customers.

But in a late Wednesday night court filing, a group of non-U.S. FTX customers who say they are owed $1.9 billion told U.S. Bankruptcy Judge John Dorsey that this case is different.

They also warned that disclosure could undermine FTX’s efforts to sell parts of its business, which it wants to do to make more money available for creditors.

“Cryptocurrency holders are particularly susceptible to fraud and theft because cryptocurrency is difficult to trace and there are fewer security safeguards in place to protect the assets,” the group wrote.

FTX, once led by Sam Bankman-Fried, is also seeking an exception that would keep its customers’ names secret.

That request has been opposed by the U.S. Department of Justice’s bankruptcy watchdog, as well as various media including the New York Times and Wall Street Journal.

Customer privacy has been an issue in other crypto-related bankruptcies.

In October, for example, the judge overseeing Celsius Network’s bankruptcy ruled that customer names must be revealed, but their addresses and email addresses could be kept secret.

Two years ago, Dorsey let the customer list of crypto lender Cred remain secret, to preserve Cred’s ability to “market and sell that list” as part of a possible sale of the company.

Dorsey will hear arguments on customer privacy at a Jan. 11 hearing in Wilmington, Delaware. He has asked a committee representing all FTX creditors to weigh in.

Lawyers for the official FTX creditors committee did not immediately respond to a request for comment on Thursday.

(Reporting by Dietrich Knauth; Editing by David Gregorio)

NEW YORK (Reuters) – The price of Solana, a cryptocurrency token that had been lauded by FTX founder Sam Bankman-Fried, fell 10.36% on Wednesday, and is down 94.2% so far in 2022.

The collapse of FTX has rippled across the industry, hobbling liquidity at firms with exposure to what was once one of the world’s biggest crypto exchanges.

Solana, or SOL, is the token behind the upstart Solana blockchain, which supports smart contracts, including non-fungible tokens, and has emerged as a rival to the ethereum blockchain.

Bankman-Fried, who is expected to enter a plea next week to criminal charges he defrauded investors and looted billions of dollars in customer funds at FTX, frequently praised Solana. FTX and Alameda, Bankman-Fried’s trading firm, held Solana tokens on their balance sheets.

While Solana has no direct relation to FTX, and had limited exposure to the failed exchange, its association with Bankman-Fried has been a drag.

“The general problem with crypto is that its lack of intrinsic value means that values are based on confidence and perceived utility. If those suffer in relation to a specific token, then it suffers,” said Steve Sosnick, chief strategist at Interactive Brokers.

A representative for Solana was not immediately available for comment.

SOL has dropped 51.14% since the furor around FTX began unfolding on Nov. 2. In the same period, ether has fallen about 21.3% and bitcoin 17.6%.

The price of Serum, or SRM, the token for the decentralized exchange of the same name created by Bankman-Fried on the Solana blockchain, is down 80.5% since Nov. 2, trading at just over 14 cents, according to coinmarketcap.com.

The total market capitalization of the cryptocurrency market now stands at $798.4 billion, according to the website, down from a peak of over $3 trillion in Nov. 2021.

(Reporting by John McCrank; Editing by David Gregorio)

By Jonathan Stempel

NEW YORK (Reuters) – Sam Bankman-Fried is expected to enter a plea next week to criminal charges he defrauded investors and looted billions of dollars in customer funds at his failed FTX cryptocurrency exchange.

The 30-year-old is expected to be arraigned on the afternoon of Jan. 3, 2023, before U.S. District Judge Lewis Kaplan in Manhattan federal court, court records on Wednesday showed.

Kaplan was assigned to the case on Tuesday, after the original judge recused herself because her husband’s law firm had advised FTX before its collapse.

Prosecutors have accused Bankman-Fried of engaging in a years-long “fraud of epic proportions,” by using customer deposits to support his Alameda Research hedge fund firm, buy real estate and make political contributions.

Bankman-Fried is charged with two counts of wire fraud and six counts of conspiracy, including to launder money and commit campaign finance violations, and if convicted could spend decades in prison.

Before his Dec. 12 arrest, Bankman-Fried acknowledged risk-management failures at FTX, but said he did not believe he was criminally liable.

Two of his associates, former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang, have pleaded guilty over their roles in FTX’s collapse and agreed to cooperate with prosecutors.

A lawyer for Bankman-Fried did not immediately respond to requests for comment.

Bankman-Fried was released on Dec. 22 on a $250 million bond and ordered to stay with his parents in Palo Alto, California, where they teach at Stanford Law School. He is subject to electronic monitoring.

FTX filed for bankruptcy protection on Nov. 11. Its new chief executive, John Ray, told Congress on Dec. 13 that the exchange lost $8 billion of customer money while being run by “grossly inexperienced, non-sophisticated individuals.”

(Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis)

By Kevin Buckland and Amanda Cooper

LONDON/TOKYO (Reuters) – The dollar touched its highest in over a week against the yen on Wednesday, boosted by a jump in Treasury yields and by anticipation among investors of a rebound in Chinese growth as COVID-19 curbs loosen.

The yen also came under pressure after the Bank of Japan signaled that a surprise policy shift last week did not mark the start of a broader withdrawal of monetary stimulus.

The dollar rallied by as much as 0.67% to 134.40 in Asian trading, the most since Dec. 20, when the BOJ sent the pair spiralling lower with an unexpected loosening of the 10-year Japanese government bond yield policy band.

That day, the yen staged its biggest one-day rally against the dollar in 24 years, closing 3.8% higher on the day, as traders speculated about an eventual unwinding of stimulus.

A summary of opinions from the meeting though, released Wednesday, showed policymakers backing a continuation of ultra-accommodative policy, even as they discussed growing prospects the country could see higher wage growth and sustained inflation next year.

“It basically confirmed that the BOJ surprise from last week was a one-off, but from a longer-term viewpoint nobody believes it,” said Osamu Takashima, head of G10 FX strategy at Citigroup Global Markets Japan, who expects dollar-yen to fall through 130 in the second half of next year.

“But in the near term, dollar-yen is bouncing back,” he said. “Now, the market is expecting a solid recovery in the Chinese economy,” and those hopes have strongly lifted bond yields, buoying dollar-yen, he added.

The 10-year Treasury yield, which tends to have a high correlation with the dollar-yen pair, was at 3.8316%, down 3 basis points, having hit a six-week high of 3.862% the previous day.

Throwing a spanner into the works for markets in the final weeks of the year is China’s rapid dismantling of its strict zero-COVID policies, which have severely hampered its economy for nearly three years.

Investors are faced with having to reconcile the pickup in economic activity as China’s consumers and businesses return to some kind of normality, with the impact of a surge in infections on the recovery.

“With infection levels running at many thousands per day, it’s little wonder that China’s COVID response should top many analysts’ list of concerns about 2023,” David Cottle, an analyst at DailyFX, said.

The dollar index, which measures the greenback against six major currencies, rose 0.1% to 104.31. It hit a six-month low of 103.44 two weeks ago when the Federal Reserve slowed interest rate hikes to a half-point pace.

Fed officials including Chair Jerome Powell though have stressed since then that policy tightening will be prolonged, with a higher terminal rate, fueling worries of a U.S. slowdown.

“The dollar is in a very interesting situation,” said Bart Wakabayashi, a branch manager at State Street in Tokyo.

“If we have a recession in the U.S., the Fed will have to cut rates, and obviously you will want to sell the dollar,” he said. “At the same time, if there’s a global recession, people will buy the dollar as a haven. So the dollar is in a bit of a conundrum, and you have to be really careful what currency you’re buying or selling against.”

The euro was flat at $1.0637, having traded steadily around six-month highs for the past couple of weeks, since European Central Bank President Christine Lagarde stressed rate hikes would need to continue.

Sterling held at $1.2028 against the dollar and was steady against the euro at 88.45 pence.

The Australian dollar rose 0.4% to 0.07% to $0.6758, while the New Zealand dollar rose 0.41% to $0.6299.

(Reporting by Kevin Buckland; Editing by Stephen Coates & Simon Cameron-Moore)

(Reuters) – U.S.-based crypto exchange Kraken said on Wednesday said it has decided to cease its operations in Japan.

Kraken will deregister from the Financial Services Agency (JFSA) as of Jan. 31, 2023, it said in a statement.

(Reporting by Rhea Binoy in Bengaluru; Editing by Savio D’Souza)

By Tom Hals and Dietrich Knauth

(Reuters) – FTX customers filed a class action lawsuit against the failed crypto exchange and its former top executives including Sam Bankman-Fried on Tuesday, seeking a declaration that the company’s holdings of digital assets belong to customers.

The lawsuit is the latest legal effort to lay claim to the dwindling assets of FTX, which is already feuding with liquidators in the Bahamas and Antigua as well as the bankruptcy estate of Blockfi, another failed crypto company.

FTX pledged to segregate customer accounts and instead allowed them to be misappropriated and therefore customers should be repaid first, according to the lawsuit filed in U.S. Bankruptcy Court in Delaware.

“Customer class members should not have to stand in line along with secured or general unsecured creditors in these bankruptcy proceedings just to share in the diminished estate assets of the FTX Group and Alameda,” said the complaint.

FTX did not immediately respond to a request for comment.

Bahamas-based FTX halted withdrawals last month and filed for bankruptcy after customers rushed to pull their holdings from the what was once the second-largest cryptocurrency exchange after questions surfaced about its finances.

Bankman-Fried faces charges stemming from what a federal prosecutor called a “fraud of epic proportions” that included allegedly using customer funds to support his Alameda Research crypto trading platform.

Bankman-Fried has acknowledged risk-management failures at FTX but said he does not believe he has criminal liability. He has not yet entered a plea and was released on a $250 million bond last week that included restrictions on his travel.

The proposed class, which wants to represent more than 1 million FTX customers in the United States and abroad, seeks a declaration that traceable customer assets are not FTX property. The customer class also wants the court to find specifically that property held at Alameda that is traceable to customers is not Alameda property, according to the complaint.

The lawsuit seeks a declaration from the court that funds held in FTX U.S. accounts for U.S. customers and in FTX Trading accounts for non-U.S. customers or other traceable customer assets are not FTX property. The customer class also wants the court to find specifically that property held at Alameda that is traceable to customers is not Alameda property, according to the complaint.

If the court determines it is FTX property, then the customers seek a ruling that they have a priority right to repayment over other creditors.

Crypto companies are lightly regulated and often based outside the United States and deposits are not guaranteed as U.S. bank and brokerage deposits are, complicating the question of whether the company or customers own the deposits.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Sam Holmes)