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Collapse of FTX deprives academics of grants, stokes fears of forced repayment

By Elizabeth Howcroft

LONDON (Reuters) – The collapse of crypto exchange FTX and its grant-making body, the FTX Future Fund, has left some researchers at top universities without the funds they were promised and others trying to repay grants before they could be ordered to.

Launched in February 2022, the FTX Future Fund was part of the FTX Foundation, the philanthropic arm of Sam Bankman-Fried’s crypto empire which fell apart last year, in what U.S. prosecutors called an “epic” fraud.

Federal prosecutors in Manhattan have accused the FTX founder of stealing billions of dollars in customer funds to plug losses at his hedge fund, Alameda Research. He denies wrongdoing.

On Nov. 11, 2022 – the same day that FTX filed for bankruptcy – the team behind the fund announced via a blog post on an altruism forum that they had resigned and would be unlikely to honour their commitments to those awarded grants.

“We deeply regret the difficult, painful, and stressful position that many of you are now in,” the post by Nick Beckstead, Leopold Aschenbrenner, Avital Balwit, Ketan Ramakrishnan and William MacAskill said.

Beckstead, Aschenbrenner, Ramakrishnan and MacAskill did not respond to multiple attempts to contact them via LinkedIn, Twitter and email for this article. Balwit declined to comment.

Representatives for FTX also declined to comment and declined to say whether the FTX Foundation is included in the bankruptcy proceedings.

PhD student Korbinian Kettnaker told Reuters he has been forced to drop out of his studies in the philosophy of computer science at Britain’s University of Cambridge after his funding from FTX fell through.

The FTX Future Fund supported research into topics that “improve humanity’s long-term prospects” and was funded primarily by Bankman-Fried, according to a profile of its activities published on Twitter. It aimed to spend between $100 million and $1 billion in its first year, it said, without disclosing its endowment.

The fund had spent $132 million across 262 grants and investments as of June 2022, according to archived snapshots of its now-deleted website.

Announcements on the website indicate there were at least 20 researchers at top universities including Cornell, Princeton and Brown in the United States, and Cambridge in Britain, who received grants of more than $100,000 each. University-linked research projects received more than $13 million in total, according to Reuters calculations based on these announcements.

Cornell, Princeton, Brown and Cambridge did not respond to Reuters’ requests for comment.

TOLD TO LEAVE

Kettnaker began his PhD at the University of Cambridge in October, expected to take four years, having successfully applied for a Future Fund grant of $158,000 to pay his approximately 27,000 pounds ($33,620.40) annual tuition fee and yearly stipend of 18,000 pounds.

The grant hadn’t been paid by November but Kettnaker expected it to arrive in time for his first end-of-term bill.

When he saw news of FTX collapsing, he did not realise at first that it would affect his funding, he told Reuters.

“There was a surreal moment where this distant piece of world news and my life suddenly interlocked,” he said.

Kettnaker’s college gave him a deadline of Jan. 31 to find new funding. Unable to find any, he asked to have his place put on hold for the rest of the academic year and left on Feb. 1.

The university did not respond to a request for comment.

LAWYERING UP

Some students who had already received funding faced other problems, such as the ethical question of what to do with funding that might be related to the proceeds of alleged fraud or what to do if FTX demanded it back to pay creditors.

Under U.S. bankruptcy law, payments made within 90 days of a Chapter 11 bankruptcy filing could be subject to a “clawback order”, meaning researchers could be asked to hand back grants.

On Feb. 5, FTX said in a press release it was asking recipients of payments from the debtors in the FTX bankruptcy filing to return their funds by the end of the month, adding that it could take legal action against recipients if they do not return the money voluntarily.

FTX’s statement did not reference the FTX Future Fund specifically.

One FTX Future Fund beneficiary in the U.S., who asked not to be named, said they received a grant of more than $150,000. They are now trying to return the money but could not comment on the process.

The student told Reuters they believed there were hundreds of university students in receipt of funding in the $10,000 to $50,000 range, based on the numbers in online groups and forums.

Mark Felger, a lawyer at U.S. firm Cozen O’Connor, said he had been contacted by about a dozen people based in Europe and the United States who had received between $100,000 to $2 million from the FTX Future Fund.

“It’s really unclear at this early stage of the proceedings how aggressively the FTX trustee will pursue the smaller clawback claims,” he said.

FTX’s new CEO has said that his top priority is recovering assets to repay FTX customers, but Felger said none of the grant recipients he has spoken to have received formal demand letters.

“Many of the folks are going to sit tight for now and see how the case plays out,” he said, adding that FTX has two years from the date of the bankruptcy to file a clawback claim.

($1 = 0.8031 pounds)

(Reporting by Elizabeth Howcroft, editing by Sinead Cruise, Alexandra Hudson)

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Cryptoverse: Bitcoin traders like their options

By Medha Singh and Lisa Pauline Mattackal

(Reuters) – Even as bitcoin flies high, investors are keeping their options open, judging by a record race to derivatives.

Open interest for bitcoin options and futures has spiked over the past month as fear has stalked global banking, hitting an all-time high of 433,540 contracts on March 23 on Deribit, a leading exchange for crypto-focused derivatives products.

In the 12 months preceding March, by contrast, open interest ranged between 150,000 and 300,000, referring to the number of contracts yet to be settled between buyers and sellers, which provides a measure of investor participation in a market.

Most options traders are betting on bitcoin prices jumping higher, with open interest in call options at 206,979 contracts on Deribit, more than double the bearish put options of 93,857.

In notional terms, open interest in bitcoin’s most recent peak at $12.24 billion on March 22 was the highest since mid-November when bitcoin was trading near $60,000, according to Deribit data.

“We’ve never seen this much activity before,” said Luuk Strijers, chief commercial officer at Deribit. “We have reached the same levels of open interest as 2021 at half the prices, which means we have doubled.”

Options contracts give their buyers the right, but not an obligation, to buy or sell an underlying asset at a fixed price in the future. Such contracts are not only used as a lower-risk, lower-reward alternative to actually buying bitcoin, but also as a way to hedge other bets, making it a better gauge of investor participation than an indicator of price expectations. 

(Graphic: Crypto options shine – https://www.reuters.com/graphics/FINTECH-CRYPTO/WEEKLY/jnvwyjmmovw/chart.png)

RELATIVE VALUE TRADES

Nonetheless, investors may have good reason to be bullish about the spot price of bitcoin, which has risen 69% in 2023 to about $28,020 making it one of the best-performing assets of the year.

Furthermore, bitcoin futures on the CME exchange are trading in “contango”, meaning future contract prices are trading higher than earlier ones, indicating investors expect prices to keep going up. Futures for April trade at $28,475 while the May contract trades at $28,645, data from the exchange showed. 

“This has set up the market for some interesting relative value trades where bitcoin can now be used as a funding or hedging instrument,” analysts at crypto investment firm Matrixport said.

Leo Mizuhara, CEO of digital assets management platform Hashnote, said the macro environment for bitcoin and other digital assets was turning more favorable given the Federal Reserve’s large liquidity injections to shore up the banking sector.

While the recent Fed actions could trickle through to crypto, overall liquidity in crypto spot markets still remains low, which could lead to sharp swings in prices, market participants cautioned. 

Bitcoin volatility is hovering around 66, below a peak of 96 hit during March’s banking turmoil but still higher than where it started 2023 at 58, according to data from CryptoCompare.

ETHER BREAKTHROUGH?

After an estimated $4 billion of bitcoin options expired at the end of first quarter on March 31, open interest had eased to $8.7 billion on Monday – still at levels not seen in the two years before March.

Investors are still also bullish on ether, judging by options trading. Open interest in ether on Deribit features 1.7 million call options versus 656,158 puts.

The spot price of ether has jumped 50% to $1,795 this year, while the Ethereum blockchain is preparing for another significant upgrade to the blockchain later in April, known as the Shanghai upgrade.

For the past two weeks, though, both ether and its big brother bitcoin have been eerily treading water, leaving investors to place bets on boom or bust.

“Bitcoin has ranged between $26,500 and $29,000 and ether between $1,700 and $1,850,” said Aakash Desai, an options trader at crypto liquidity provider B2C2.

“Breakthroughs in either direction could be interesting.”

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

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Dogecoin jumps as Musk’s Twitter flips logo to Shiba Inu dog

(Reuters) – Dogecoin’s Shiba Inu dog replaced Twitter’s blue bird as the social media company’s logo on Monday, helping the meme coin add as much as $4 billion to its market value.

The token, born as a satire of a cryptocurrency frenzy in 2013 and has no fundamental use, on Tuesday surged to 10 cents around 1500 EST from 7 cents as Elon Musk indicated in a tweet he had delivered on his promise of changing the social media app’s logo to dogecoin’s dog.

With a market capitalization of $13.7 billion, dogecoin is now the seventh biggest cryptocurrency, according to data site CoinMarketCap.com. Its market value stood at around $10 billion before the news.

Musk, who is ranked the second-richest person in the world by Forbes, is a vocal proponent of cryptocurrencies and has heavily influenced prices for dogecoin and bitcoin in the past.

The Tesla boss on Friday asked a U.S. judge to throw out a $258 billion racketeering lawsuit accusing him of running a pyramid scheme to support dogecoin.

Dogecoin more than doubled in October after Musk, dubbed “the dogefather” by retail traders, sealed a $44 billion deal to take over Twitter.

Cryptocurrency exchange Binance, which invested $500 million into Musk’s buyout of Twitter, had said it was brainstorming strategies on how blockchain and crypto could be helpful to Twitter.

“A year later, Twitter has yet to announce any crypto specific initiatives,” said Stéphane Ouellette, Chief Executive at digital asset investment platform FRNT Financial.

“It remains to be seen whether the appearance of the DOGE logo is more than a joke.”

The shiba inu token, a spinoff of dogecoin which trades in fractions of cents, rose 5.6% to $0.000014 on Tuesday.

(This story has been corrected to change the day to Monday from Tuesday in paragraph 1)

(Reporting by Medha Singh in Bengaluru; Editing by Anil D’Silva)

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Crypto exchange Binance expands in Argentina

By Anna-Catherine Brigida

BUENOS AIRES (Reuters) – Crypto exchange Binance, which has been sued by U.S. regulators, said on Tuesday it is expanding services in inflation-hit Argentina, allowing users to buy and sell digital currencies directly with local pesos.

The move allows Argentines to transfer pesos into a Binance account via a local partner, which can then be used to purchase cryptocurrency. Until now, Binance had operated in Argentina only as an intermediary platform to match crypto buyers and sellers.

“This launch has to do with the public demand that exists here,” Maximiliano Hinz, director for Binance in the Southern Cone, told Reuters in a written statement on Tuesday, adding that Argentina was a key market for the exchange.

He said local users could transfer pesos to a Binance account and see their balance reflected there in local currency, which would then be usable to buy crypto.

The expansion in Argentina, where annual inflation above 100% has made cryptocurrencies more attractive despite their volatility and risk, comes as Binance faces regulatory scrutiny in the U.S. and elsewhere.

The U.S. Commodity Futures Trading Commission (CFTC) late last month sued the firm and CEO Changpeng Zhao for operating what the regulator alleged were an “illegal” exchange and a “sham” compliance program.

Zhao, a China-born billionaire who moved to Canada at age 12, has called the CFTC’s complaint “unexpected and disappointing.”

As Binance has faced mounting scrutiny from regulators, the exchange has lost some banking partners needed for so-called on-ramp, off-ramp transactions to fiat currencies. Paysafe, which processed sterling payments, most recently withdrew in March.

Argentina does not regulate crypto exchanges, but the central bank has repeatedly warned about the risks of cryptocurrencies and markets regulator CNV is backing a bill to create a registry of providers offering virtual assets.

The South American country, which has strict capital controls that limit foreign currency exchange, was among the top 15 countries in the world for crypto adoption last year, according to the Chainalysis index.

“Argentine users know the crypto world,” Hinz said.

(Reporting by Anna-Catherine Brigida in Buenos Aires; Editing by Matthew Lewis)

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US SEC nears deal with ex-Coinbase employee accused of insider trading -filing

By Chris Prentice

NEW YORK (Reuters) – The U.S. Securities and Exchange Commission is nearing a settlement with a former Coinbase Global Inc product manager in a landmark case of insider trading involving cryptocurrency, according to a court filing this week.

The SEC has reached “an agreement in principle” with Ishan Wahi to resolve its claims against him, the agency said in a court document filed on Monday.

Regulators have accused Wahi, his brother Nikhil Wahi and a close friend of reaping at least $1.1 million in illicit profits by using nonpublic information related to crypto listing announcements he obtained as an employee of Coinbase.

The case has drawn significant attention as one of the latest actions by a regulator that has grown increasingly aggressive on policing the crypto industry.

Last month, a trade group urged a judge to dismiss the matter, noting it could have wide-ranging consequences for the digital asset industry and harm crypto investors.

In its Monday filing, the SEC said it is also engaged in “good faith discussions” with Nikhil Wahi that may resolve the claims against him.

The Wahi brothers have both pleaded guilty to parallel criminal charges. In February, they asked a judge in Seattle to dismiss the SEC’s case, saying the charges represent an “abuse of power.”

Any settlement recommended by staff will need to be reviewed and approved by the SEC’s commissioners, “a process that can take a a number of weeks,” the regulator said.

A lawyer for the Ishan Wahi and a spokesperson for the SEC both declined to comment. A lawyer for Nikhil Wahi did not respond immediately to requests for comment.

(Reporting by Chris Prentice; Editing by Marguerita Choy)

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U.S. Supreme Court weighs Coinbase arbitration dispute

By Andrew Chung and John Kruzel

WASHINGTON (Reuters) – The U.S. Supreme Court on Tuesday is set to hear a bid by cryptocurrency exchange Coinbase Global Inc to halt customer lawsuits, including by a user who sued after a scammer stole money from his account, as it pursues an effort to move the disputes out of courts and into private arbitration.

The justices are due to hear arguments in Coinbase’s appeal of lower court decisions letting the proposed class action lawsuits proceed while it presses its contention that the claims belong in arbitration.

Companies generally prefer to arbitrate claims because the process is cheaper and faster than litigation in court, which can be harder to fight and carries a greater risk of hefty damages awards.

Coinbase’s exchange allows users to transact in digital currencies such as bitcoin and ether. The company asserts that its user agreement requires disputes to be resolved through arbitration and that under a law called the Federal Arbitration Act, which governs dispute resolution proceedings through arbitration, action in trial courts must come to a halt when a denial of a request to compel arbitration is appealed.

One of the cases involves a California lawsuit by customer Abraham Bielski, who alleged that a scammer stole more than $30,000 from his Coinbase account in 2021. The suit accused the company of violating the Electronic Funds Transfer Act by not investigating or recrediting Bielski’s account.

In the other suit, former users accused the company of violating California’s false advertising law by duping them into paying to participate in a 2021 sweepstakes that offered prizes in dogecoin, a type of cryptocurrency.

In both cases, federal judges refused to force the claims into arbitration, as the company argued the user agreements required. While Coinbase immediately appealed those decisions, the San Francisco-based 9th U.S. Circuit Court of Appeals in 2022 refused the company’s requests to put further litigation on hold pending those appeals.

After Coinbase asked the Supreme Court to hear the case, a trial judge in the sweepstakes case halted those proceedings until the end of March.

Coinbase told the Supreme Court that allowing the cases to proceed in court when it might yet win the right to arbitrate the claims “defeats the purpose of arbitration.”

A ruling is due by the end of June.

(Reporting by Andrew Chung; Editing by Will Dunham)

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Cryptoverse: Bitcoin passes the bank stress test

By Lisa Pauline Mattackal and Medha Singh

(Reuters) – As crisis stalks the traditional world of stocks and bonds, bitcoin is suddenly looking like a safe haven.

The infamously volatile cryptocurrency seems positively hale and hearty, just as a banking meltdown drives markets into the arms of a recession.

    Bitcoin has risen 21% this month, while a choppy S&P 500 has lost 1.4% and gold has gained 8%.

“If you were going to describe an environment where there were successive bank runs because central banks are trying to fight inflation with fast rate increases, that is pretty close to as spot-on a thesis for owning bitcoin as you’ve ever heard,” said Stéphane Ouellette, CEO at digital asset investment platform FRNT Financial.

The cryptocurrency has, for now, severed its ties with stocks and bonds and tagged on to a rally in gold, fulfilling at least one part of creator Satoshi Nakamoto’s dream – that bitcoin can serve as a refuge for suffering investors.

Bitcoin’s 30-day correlation with the S&P 500 has slid to negative 0.12 over the past week, where a measure of 1 indicates the two assets are moving in lock step. 

A selloff in banks has wiped out hundreds of billions of dollars in market value and forced U.S. regulators to launch emergency measures. The past couple of weeks has seen Silicon Valley Bank and crypto lender Silvergate go under, while Credit Suisse has teetered on the brink.

Graphic: Bitcoin refuge amid chaos https://www.reuters.com/graphics/FINTECH-CRYPTO/WEEKLY/egvbyjaakpq/chart.png

‘RETURN TO CORE ETHOS’

Let’s not carried away, though. This is bitcoin.

“The bearish argument would be that these dynamics are temporary, and ultimately this rally is not going to sustain,” said Ouellette.

It remains to be seen if bitcoin’s bullishness will endure as attention shifts to the Federal Reserve’s policy meeting this week where the U.S. central bank must walk a fine line as it fights inflation and bank stresses.

Furthermore, the cryptocurrency’s allure hasn’t all been about safety.

The rapid price rise has forced some short-sellers to cut their bets and buy coin back. Data from Coinglass shows traders liquidated $300 million worth of crypto positions on Monday, with most of that total – $178.5 million – short positions.

Nonetheless, bitcoin is resurgent.

It now commands nearly 43% of the total crypto market, its highest share since last June, according to CoinMarketCap data, while the total cryptocurrency market’s capitalization has jumped 23% to $1.1 billion since March 10.

“We’re seeing a return to bitcoin’s core ethos, that of a financial asset independent from the opacity and meddling of the centralized financial system,” said Henry Elder, head of decentralized finance (DeFi) at digital asset investment manager Wave Digital Assets.

The mainstream bank crisis has also fueled some interest in DeFi, with the total value of tokens linked to such platforms rising to $49 billion from $43 billion over the past week, according to DappRadar. 

BITCOIN IN A BANK CRISIS

Not all areas of the digital world have been immune to the banking fallout, though. The no. 2 stablecoin Circle USD or USDC lost its 1:1 peg to the dollar after disclosing its reserves were parked at the shuttered Silicon Valley Bank.

As worries spread over USDC’s ability to maintain its peg, its market cap slid to $36.8 billion last Friday from $43.8 billion a week earlier, even as leading stablecoin Tether gained around $4 billion.

Market participants said some USDC withdrawals were likely reinvested in bitcoin as well, helping fuel the rally.

“It’s too soon to say that bitcoin has proven the narrative that it’s an alternative in a banking crisis,” cautioned Ed Hindi, Chief Investment Officer at Tyr Capital in Geneva.

But he added: “The rally we are currently witnessing in bitcoin will be looked back at as the point in time where its main property as a decentralized non-sovereign asset was stress tested.”

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

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Coinbase halts support for Signature Bank’s digital payments platform

(Reuters) – Cryptocurrency exchange Coinbase Global Inc said on Monday it has stopped support for Signature Bank’s digital payments platform Signet, more than a week after U.S. regulators took control of the bank.

The exchange said it was looking for a new technology provider or for more clarity on the outcome of Signet, which allowed real-time crypto-to-fiat currency transactions.

Coinbase’s users who relied on Signet will not be able to transact outside of traditional banking hours, the exchange said.

New York-based Signature was one of two major U.S. banks that collapsed earlier this month, triggering market turmoil on a scale similar to the global financial crisis 15 years ago.

Prior to its unraveling, the bank had been looking to shrink its footprint in the crypto space after the bankruptcy of FTX and troubles at peer Silvergate Bank, which also said it was winding down operations earlier this month.

On Sunday, a unit of New York Community Bancorp entered into an agreement with U.S. regulators to buy deposits and loans from Signature Bank.

(Reporting by Niket Nishant in Bengaluru; Editing by Shounak Dasgupta)

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FTX sues liquidators of its Bahamian affiliate over crypto exchange ownership

By Dietrich Knauth

(Reuters) – Bankrupt crypto exchange FTX on Sunday sued the liquidators overseeing the wind-down of its Bahamian affiliate FTX Digital Markets, accusing them of wrongly claiming ownership of the exchange’s assets.

FTX’s U.S. based bankruptcy team, led by new CEO John Ray, said in its lawsuit that the liquidators were laying claim to FTX.com’s cryptocurrency, intellectual property, and customer relationships.

FTX called FTX DM a “fraudulent enterprise”, initially set up only to be a “local service company”, which did not own the FTX.com exchange or any of the cryptocurrency seized.

FTX has been at odds with Bahamian officials ever since filing for bankruptcy protection on Nov. 11. The Securities Commission of the Bahamas began liquidation proceedings against FTX DM a day before the U.S. bankruptcy filing of FTX Trading and more than 100 affiliates, and the two sides have sparred over ownership of FTX assets and access to company data.

FTX’s founder and former CEO Sam Bankman-Fried has been arrested on fraud charges and is expected to face trial in October.

FTX reported this month that Bankman-Fried took $2.2 billion in funds from the company during a period when the crypto exchange lost $8 billion of customer money.

(Reporting by Dietrich Knauth)

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Sam Bankman-Fried, U.S. prosecutors near new bail agreement

By Jonathan Stempel

NEW YORK (Reuters) – Lawyers for Sam Bankman-Fried are nearing an agreement with U.S. prosecutors on revised bail conditions for the indicted FTX cryptocurrency exchange founder, who is trying to convince a skeptical judge he should remain free.

In a letter filed on Friday night in Manhattan federal court, Bankman-Fried’s lawyer Christian Everdell said both sides believed they were “close to a resolution”, and expect to formally propose new restrictions by next week.

Bankman-Fried, 31, faces a trial set for Oct. 2 on charges of stealing billions of dollars in FTX customer funds to plug losses at his Alameda Research hedge fund, and making large illegal political donations to buy influence in Washington, D.C.

Bail talks occurred this week after U.S. District Judge Lewis Kaplan at a March 10 hearing renewed his concerns that Bankman-Fried’s electronic communications with others might exceed the bounds of his $250 million bail package.

Kaplan’s approval is needed to modify Bankman-Fried’s bail.

The former billionaire has pleaded not guilty to eight counts, and not yet been arraigned on four. He is living under house arrest with his parents in Palo Alto, California.

Prosecutors raised the specter of witness tampering in January after Bankman-Fried tried to contact John Ray, who became FTX’s chief executive when the company filed for bankruptcy in November, and an in-house lawyer.

Bankman-Fried’s lawyers have said their client was trying to help, not interfere.

At the March 10 hearing, prosecutors and defense lawyers proposed giving Bankman-Fried a flip phone with no internet capability and a basic laptop with limited functions.

That was too generous for Kaplan, who said Bankman-Fried was “inventive” and could conceivably “find a way around” the restrictions without being caught.

In Friday’s letter, Everdell also sought the judge’s permission to let Bankman-Fried in the meantime use a laptop to access some FTX materials.

Though the laptop would lack monitoring software or restrict Bankman-Fried’s internet access, a lawyer or paralegal would oversee his use and take the laptop away when Bankman-Fried finished with it, Everdell said.

The case is U.S. v. Bankman-Fried, U.S. District Court, Southern District of New York, No. 22-cr-00673.

(Reporting by Jonathan Stempel in New York; Editing by Sonali Paul)

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Bitcoin near 9-month high as bank turmoil sparks rally

By Georgina Lee

HONG KONG (Reuters) – Bitcoin hovered near nine-month highs on Monday, and has closed out its best week in four years as turmoil in traditional banking drives some investors to turn to digital assets.

The biggest cryptocurrency by market value fell 1.8% in Asia hours to $27,549 after hitting its highest since June 12 on Sunday at $28,474.

It rose 26% last week and is up more than 35% in ten days as turmoil in the banking sector has rippled around the globe — beginning with the collapse of Silicon Valley Bank and culminating, so far, in UBS’ takeover of Credit Suisse at a discount over the weekend.

“The momentum is all driven by liquidity, as bitcoin is an alternative liquidity vehicle,” said Markus Thielson, head of research and strategy at digital asset financial services firm Matrixport based in Singapore.

He expects bitcoin can hit $45,000 by year’s end, with liquidity from central banks finding its way into crypto assets, much as it did during 2021, when bitcoin scaled record highs.

The U.S. Federal Reserve on Sunday said it and other big central banks would deepen liquidity by increasing the frequency of dollar supply operations into financial markets.

Ether, the second-biggest cryptocurrency, rose to a seven-month high of $1,846.50 on Sunday and was last at $1,768.

(Reporting by Georgina Lee; Editing by Christian Schmollinger)

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Safe-haven yen regains footing as caution builds over bank contagion

By Kevin Buckland

TOKYO (Reuters) – The safe-haven yen rebounded from early steep declines and the risk-sensitive Australian and New Zealand dollars flipped to losses as early optimism ebbed over efforts by global authorities to contain a banking crisis.

Japan’s currency, which is particularly sensitive to long-term Treasury yields, rebounded from losses as steep as 0.6% to last be flat against the dollar as the U.S. 10-year yield fell sharply heading into the start of European trading, reversing an earlier 12 basis-point rise.

The Aussie, which at one point had been up by 0.7% to a nearly two-week top of $0.6743, was last 0.2% lower at $0.6683, sliding back below the closely watched $0.67 mark. New Zealand’s kiwi was 0.3% lower at $0.6250, giving up an earlier gain of as much as 0.7%.

Over the weekend, the Federal Reserve, European Central Bank, Bank of England, Swiss National Bank, Bank of Canada and Bank of Japan announced joint action to enhance market liquidity. That followed Swiss authorities’ negotiation of a buyout of Credit Suisse by UBS, but at a huge discount and with a $17 billion debt writedown.

“The market’s driving force is risk aversion,” said Takahiro Sekido, chief Japan strategist at MUFG.

“I’m not so pessimistic, but still we have to wait and see how much we will see risk contagion from Europe,” he said. “At least within this week, I expect the yen will stay strong.”

The yen last traded at 131.79 per dollar, keeping intact a 2.5% gain from last week.

The euro was about flat at $1.0671 and sterling was little changed at $1.2189, both erasing earlier small gains.

A Fed rate decision on Wednesday adds an additional layer of uncertainty. Traders are still of the view that a quarter point rise is likely but are now positioned for a peak in rates in May at around 4.8%, followed by a steady series of cuts into the end of the year.

The U.S. dollar index – which measures the currency against six major peers, including the yen and euro – was flat at 103.80, stabilising following last week’s 0.7% slide.

“Almost regardless of Fed this week, (it’s) hard to see risk markets quickly rowing away from banking sector concerns, leaving USD not too far from a safety bid,” Ray Attrill, head of foreign-exchange strategy at National Australia Bank, wrote in a note to clients.

In cryptocurrencies, bitcoin took a breather after its surge to a nine-month high of $28,474 on Sunday, last trading 1.5% weaker at around $27,629.

Gold was flat at $1,989 an ounce, recovering from a decline of as much as 1%.

(Reporting by Kevin Buckland; Editing by Edwina Gibbs and Raju Gopalakrishnan)

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Bitcoin rises 5.19% to $28,380

(Reuters) – Bitcoin rose 5.19% to $28,380 at 20:01 GMT on Sunday, adding $1,400 to its previous close.

Bitcoin, the world’s biggest and best-known cryptocurrency, is up 72% from the year’s low of $16,496 on Jan. 1.

Ether, the coin linked to the ethereum blockchain network, rose 3.58% to $1,827.2 on Sunday, adding $63.1 to its previous close.

(Reporting by Urvi Dugar in Bengaluru; Editing by Chris Reese)

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Bitcoin rises 9.2% to $27,359

(Reuters) – Bitcoin surged 9.2% to $27,359 at 2207 GMT on Friday, adding $2,309 to its previous close.

Bitcoin, the world’s biggest and best-known cryptocurrency, is up 65.9% from the year’s low of $16,496 on Jan. 1.

Ether, the coin linked to the ethereum blockchain network, rose 5.5% to $1,768.5 on Friday, adding $91.6 to its previous close.

(Reporting by Yana Gaur in Bengaluru; Editing by Maju Samuel)

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FTX transferred $2.2 billion to Bankman-Fried via related entities, new managers say

(Reuters) – Bankrupt cryptocurrency exchange FTX made transfers of about $2.2 billion to company founder Sam Bankman-Fried through related entities, the company’s new management said.

Overall more than $3.2 billion was transferred through payments and loans to company founders and key employees, FTX said in a statement on Wednesday.

These payments were made chiefly from Alameda Research hedge fund, FTX said, adding that it made these disclosures by filing schedules and statements of financial affairs with the bankruptcy court.

The crypto exchange said the transfers did not include over $240 million spent to purchase luxury property in the Bahamas, political and charitable donations made directly by the FTX debtors, and substantial transfers to non-debtor units in the Bahamas and other jurisdictions.

A lawyer for Bankman-Fried declined to comment.

FTX filed for bankruptcy protection in November, saying it was unable to completely repay customers who had deposited funds on its exchange. FTX’s new CEO, John Ray, has said his top priority was recovering assets to repay FTX customers.

Prosecutors have charged Bankman-Fried, 31, with stealing billions of dollars in FTX customer funds to plug losses at Alameda Research, and making tens of millions of dollars in illegal political donations to buy influence in Washington, D.C.

He denies wrongdoing and is fighting to stay out of jail pending his scheduled Oct. 2 fraud trial.

(Reporting by Shubhendu Deshmukh in Bengaluru; Editing by Stephen Coates)

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U.S. judge refuses to delay Voyager-Binance sale during DOJ appeals

By Dietrich Knauth

(Reuters) – A U.S. bankruptcy judge declined to delay the $1.3 billion sale of crypto lender Voyager Digital to Binance.US, saying Voyager customers should not be forced to wait out a challenge by the Department of Justice that is unlikely to succeed.

Judge Michael Wiles in Manhattan ruled on Wednesday that the department had mischaracterized the scope of legal protections he had granted to Voyager employees for actions to carry out the sale and rebalance its crypto portfolio.

Wiles, who is overseeing Voyager’s Chapter 11 process, approved its bankruptcy plan last week.

The government can “can step in at any time” if it believes illegal transactions are happening, but has not presented any evidence that Voyager’s crypto transactions are illegal, Wiles said.

The U.S. Attorney’s Office for the Southern District of New York and the Office of the U.S. Trustee, the Justice Department’s bankruptcy watchdog, both filed appeals last week. They argued that the protections could rubber stamp crypto transactions that might be illegal under U.S. securities laws.

Voyager and the DOJ did not immediately respond to requests for comment. Voyager had previously said its customers should not be forced to “stand idly” during a lengthy appeal process.

Binance.US has agreed to pay $20 million in cash to Voyager, and take on crypto assets deposited by Voyager customers. Those assets, valued at $1.3 billion in February, account for the bulk of the deal’s valuation, according to Voyager.

Voyager said earlier this month it could still pull out of the deal and make an effort to return customer funds without outside help.

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

(Reporting by Dietrich Knauth in New York; Editing by Alexia Garamfalvi and Richard Chang)

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Coinbase opens local bank transfers for Singapore users at no cost

By Rae Wee

SINGAPORE (Reuters) – Cryptocurrency exchange Coinbase will let customers in Singapore move funds to and from accounts via local banks, smoothing one path to investing in digital assets at a time when markets are on edge over financial stability and crypto banking.

Transfers, in Singapore dollars, are facilitated by a traditional bank, Standard Chartered, and carry no fee, the company said in a statement. Previously, users could only purchase crypto via a Visa or Mastercard debit or credit card, or transfer crypto in and out of their Coinbase account.

Hassan Ahmed, Coinbase’s country director for Singapore, told Reuters in an interview the move was part of the company’s international expansion strategy. Rivals Crypto.com and Gemini already offer a similar service.

Coinbase, which last year received in-principle approval from the Monetary Authority of Singapore (MAS) to offer payment services in the city-state, is looking to ramp up its Singapore retail offerings, said Ahmed.

Singapore has generally welcomed crypto businesses but has been wary of encouraging retail involvement. In October, the MAS proposed rules that would forbid trading businesses from offering incentives or financing to retail customers.

Coinbase’s announcement also comes with confidence in crypto fragile as the fallout from the spectacular collapse of crypto exchange FTX continues to reverberate through markets.

Crypto-focused bank Silvergate Capital Corp became the latest casualty as it announced it would close down earlier in March.

(Reporting by Rae Wee; Editing by Mark Potter)

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NatWest limits customers’ crypto transfers, citing scam concerns

By Elizabeth Howcroft

LONDON (Reuters) – Britain’s NatWest has imposed new limits on the daily and monthly amount customers can send to cryptocurrency exchanges, seeking to protect consumers from “crypto-criminals”, the bank said on Tuesday.

From Tuesday customer transfers to cryptocurrency exchanges will be limited to 5,000 pounds ($6,088) per 30-day period, with no more than 1,000 pounds per day, NatWest said.

Regulators around the world have warned of the risks of scams and fraud in the largely unregulated world of crypto trading.

Consumers across the UK lost 329 million pounds in crypto crime last year, NatWest said, with the cost-of-living crisis contributing to the problem as criminals lure investors with the promise of high returns.

“We have seen an increase in the number of scams using cryptocurrency exchanges and we are acting to protect our customers,” said Stuart Skinner, head of fraud protection at NatWest, which is one of Britain’s domestic biggest lenders.

In June 2021 NatWest introduced some daily caps on customers’ crypto transfers to crypto exchanges, including top platform Binance, with the limits varying in size depending on the platform in question. It cited concerns over investment scams and fraud.

Santander said in November last year that it would block customers from sending real-time payments to cryptocurrency exchanges some time this year.

($1 = 0.8213 pounds)

(Reporting by Elizabeth Howcroft; Editing by David Goodman)

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Cryptoverse: New bitcoin NFTs on a multi-million roll

(Edits headline)

By Lisa Pauline Mattackal and Medha Singh

(Reuters) – Imagine digitally inscribing 3D images of objects such as multi-colored spheres onto a tiny fragment of bitcoin. Then imagine selling them for $16.5 million.

Just when you thought crypto couldn’t get any stranger, bitcoin accidentally births a new breed of NFTs.

The new entrants have materialized in 2023 following bitcoin network upgrades that enabled each satoshi – the smallest denomination of bitcoin, or one hundred millionth – to store a few megabytes of data, from text and images to audio and video.

The data storage was an unintended consequence of the upgrades. Now crypto enthusiasts have embedded a total of 385,000 “inscriptions” known as Ordinals on bitcoin since January, including more than 200,000 image files and over 150,000 text ones, according to Glassnode Market Intelligence.

“I think this is really the start of a fundamental shift in what you can do with bitcoin,” said Alex Miller, CEO at bitcoin developer network Hiro.

The colored balls form part of TwelveFold, a collection of 300 images of 3D objects rendered in a square grid, from NFT developers Yuga Labs, best known for its Bored Ape Yacht Club. It calls the set “a visual allegory” for data on blockchain. 

They became a lucrative allegory this month when the company auctioned 288 of them off for $16.5 million, according to data from research firm Delphi Digital.

Other top-selling Ordinals – named after the software protocol that facilitates inscription – include JPEGs of rocks and shadowy crowned figures which have sold for $213,845 and $273,010 respectively, according to Galaxy Digital Research. 

Although the market for bitcoin NFTs has only been going since January, Galaxy estimates it could be worth $4.5 billion by 2025, basing its bullish forecast on factors such as the growth of the more established Ethereum NFT market and the fact that bitcoin is by far the most popular cryptocurrency.

Caveat emptor, though: Little can be accurately foreseen in the highly unpredictable market for non-fungible tokens, it would appear.

Overall sales of NFTs – excluding Ordinals – stood at about $1 billion last month, according to CryptoSlam data, a recovery from the $324 million in November but still a fraction of the roughly $5 billion seen last January and $2.7 billion in May.

Nonetheless, bitcoin NFTs have built up a head of steam in a short space of time. Satoshis inscribed with NFTs are involved in about 7% of the total number of bitcoin blockchain transactions, according to Glassnode data.

Transactions aplenty, https://www.reuters.com/graphics/FINTECH-CRYPTO/WEEKLY/klvygnxeavg/chart.png

‘KIND OF FRIVOLOUS’

One of the biggest challenges for this new class of NFTs is the dearth of a user-friendly marketplaces, with early transactions taking place over-the-counter on shared online spreadsheets, according to market players.

This lack of infrastructure is a definite barrier to entry, Delphi Digital said.

Not everyone is happy about this surge of activity, especially some bitcoin purists who believe the cryptocurrency should solely be used for payments.

The average fee to make a bitcoin transaction, measured over a 7-day period, has spiked to $1.981, its highest since November, as Ordinals trading surged compared with under $1 at the start of February, according to data from Blockchain.com. 

“We want transactions to remain as inexpensive as possible so people around the world can run businesses and send money,” said Cory Klippsten, CEO of bitcoin-focused financial services firm Swan Bitcoin, who sees problems in “having it priced out through this non-monetary use case that’s kind of frivolous”.

Some critics say Ordinals are also clogging up the network; the 7-day average of time to confirm bitcoin transactions spiked to over 186 minutes in late February, its highest since November’s bitcoin selloff, according to Blockchain.com.

That’s since dropped to over 124 minutes, though that’s still significantly longer than the range of 12.8 to 35 minutes transaction time in January and February.

“Ordinals have brought some more eyes to the network,” said Brendon Sedo, a developer at the Core DAO blockchain. “But NFTs on bitcoin are a distraction from the network’s core purpose, which is to serve as a permissionless network that is globally available, 24/7, and uncensorable.”

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

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Signature Bank, former CEO are sued by shareholders for fraud

By Jonathan Stempel

NEW YORK (Reuters) – Signature Bank and three former top executives were sued on Tuesday by shareholders who accused the New York bank of fraudulently proclaiming it was financially strong a mere three days before it was seized by a state regulator.

The proposed class action against Signature and its former chief executive officer Joseph DePaolo, chief financial officer Stephen Wyremski and chief operating officer Eric Howell was filed in the federal court in Brooklyn.

It seeks unspecified damages for shareholders between March 2 and 12 when New York’s Department of Financial Services took over Signature, two days after the Federal Deposit Insurance Corp seized Silicon Valley Bank.

Signature did not immediately respond to requests for comment.

Founded in 1999, Signature specialized in real estate lending and provided many services to law firms, and in recent years made a push for cryptocurrency deposits. Former U.S. President Donald Trump had been a client until 2021.

Signature ended 2022 with $110.4 billion of assets and $88.6 billion of deposits, and is the second-largest U.S. bank to fail since 2008. Silicon Valley Bank is the largest.

In Tuesday’s lawsuit, shareholders led by Matthew Schaeffer said Signature hid how it had been “susceptible to a takeover” by making false or misleading statements about its health, in part to quell fears sparked by Silicon Valley Bank’s troubles.

These statements included that Signature could meet “all client needs,” and had enough capital and liquidity to distinguish itself from rivals during “challenging times.”

Signature’s market value was about $6.5 billion before its collapse.

The lawsuit was filed by the law firm that sued Silicon Valley Bank’s parent SVB Financial Group and its CEO and CFO on Monday.

On Sunday, U.S. regulators decided to make Signature and Silicon Valley Bank depositors whole regardless of how much they held in their accounts.

Shareholders would receive no protections. Regulators said the move would protect the U.S. economy by strengthening public confidence in banking.

The case is Schaeffer v Signature Bank et al, U.S. District Court, Eastern District of New York, No. 23-01921.

(Reporting by Jonathan Stempel in New York; Editing by Nick Zieminski)