Tag: Cryptocurrencies

By Savio Shetty and Divya Chowdhury

MUMBAI (Reuters) – The Reserve Bank of India (RBI) is justified in using the country’s foreign exchange reserves to smooth out volatility in the rupee’s moves against the dollar, a member of the Economic Advisory Council said on Monday.

“I think that the RBI is correct to use the FX reserves to smooth movement in the INR/USD… There is no point targeting a INR/USD level when USD is appreciating against all other majors,” Sanjeev Sanyal told the Reuters Global Markets Forum (GMF) in an interview.

“Longer term, we need to maintain overall macro-stability and allow the cycle to play itself out,” said Sanyal, who was previously India’s chief economic adviser.

The Council he now sits on advises Prime Minister Narendra Modi and his government on economic policy.

The Indian rupee has fallen around 7.4% against the dollar year-to-date, to trade near a record low of 80.0650.

The dollar has risen about 11.2% against a basket of currencies as markets brace for more U.S. interest rate hikes amid surging inflationary pressures and signs a weakening global economy.

Sanyal also said India’s inflation was almost entirely imported and, as an oil importer, something it could do little in the short term to control. Global oil and other energy costs have spiked this year, driven higher by the impact of the war in Ukraine and broader supply chain issues. [O/R]

Sanyal said he believed India’s current account deficit was in a comfortable position and, asked if a curb on non-essential imports was being considered, added: “The government will respond flexibly to the situation as it evolves.”

Sanyal also said India was treating crypto instruments as assets not currencies, and that their regulation would need global coordination.

(The Reuters Global Markets Forum is a chat room hosted on the Refinitiv Messenger. Join GMF: https://refini.tv/33uoFoQ)

(Reporting by Savio Shetty, Divya Chowdhury, Swati Bhat in Mumbai and Aftab Ahmed in New Delhi; editing by John Stonestreet)

SEOUL (Reuters) – North Korea on Saturday condemned remarks by a senior White House official about Pyongyang’s cyberattack capabilities and said it would continue to stand against what it called U.S. aggression towards it.

A Foreign Ministry spokesperson said that branding North Korea as a “group of criminals” revealed the true nature of Washington’s hostile policy towards North Korea.

Anne Neuberger, the U.S. deputy national security advisor for cyber and emerging technology, reportedly said on Wednesday that the North Koreans were a criminal syndicate pursuing revenue “in the guise of a country”.

North Korea is widely believed to have thousands of trained hackers and stealing of cryptocurrencies has become a major source of funding for the sanctions-hit country and its weapons programmes.

“After all, the U.S. administration has revealed the true picture of its most vile hostile policy, once covered under the veil of ‘dialogue with no strings attached’ and ‘diplomatic engagement’,” state news agency KCNA said, citing the foreign ministry spokesperson.

“In a similar fashion, the DPRK will face off the U.S., the world’s one and only group of criminals.”

(Reporting by Cynthia Kim, Editing by Angus MacSwan)

WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission is working to get some so-called cryptolending companies properly registered if they operate more as an investment firm, the head of the federal regulator told CNBC in an interview on Thursday.

SEC Chairman Gary Gensler also said it was up to large financial institutions to decide whether they want to include crypto options in their portfolios for clients, but that the risks of crypto tokens need to be made public.

(Reporting by Susan Heavey)

By Hyunjoo Jin and Nivedita Balu

(Reuters) – Tesla Inc on Wednesday reported a higher-than-expected quarterly profit as a string of price increases on its best-selling electric vehicles helped offset production challenges caused by COVID-19 lockdowns in China.

Chief Executive Elon Musk said he expects inflation will begin to ease by the end of the year, and he told a conference call that Tesla does not have a demand problem.

He dismissed the idea that global economic problems were hurting interest in Tesla, despite vehicle prices’ rising to what he called “embarrassing levels.” The U.S. price of Tesla’s Model Y long-range version, now $65,990, is up more than 30% since the start of 2021.

The company promised a “record-breaking second half” to the year and reiterated its goal of 50% average annual growth in vehicle deliveries over a multi-year horizon, but did not give specific targets for 2022 deliveries.

Shares of Tesla were up about 1% in after-hours trade. The shares are down about 40% from their peak in November.

Tesla’s China factory ended the second quarter with a record monthly production level. Musk said new factories in Berlin and Texas aimed to produce 5,000 cars a week by the end of the year, adding that Berlin produced 1,000 cars a week in June.

Musk previously had said the new factories were “gigantic money furnaces” and that he had “a super bad feeling about the economy.”

“We are prepared for near-term margin headwinds due to (new) challenges with ramping new production, particularly in Berlin,” Morgan Stanley said in a report after Tesla’s earnings announcement.

Executives acknowledged some continuing tightness in supplies of older-generation microchips, but said there were no major problems in supplies of chips and batteries barring unforeseen COVID-related shutdowns.

The EV maker posted an adjusted profit of $2.27 per share for the quarter versus analysts’ consensus estimates of $1.81.

Its automotive gross margin fell to 27.9%, down from a year earlier and the preceding quarter, amid inflationary pressure.

“Tesla’s solid quarter is the latest sign that it has done an outstanding job navigating through global supply chain and logistics challenges, weathering the storm better than most legacy automakers,” said Jesse Cohen, senior analyst at Investing.com

BITCOIN TO CASH

Tesla said it has converted approximately 75% of its bitcoin purchases into fiat currency, which added $936 million of cash to its balance sheet. Musk on the conference call said the sale was made to increase liquidity when Tesla was uncertain about how long the COVID-19 lockdown in China would continue. Tesla has not sold any of its holdings of the Dogecoin cryptocurrency.

“This should be not taken as some verdict on bitcoin,” he said, adding that Tesla is open to increasing its cryptocurrency holdings in the future.

Musk had said in May last year that Tesla would not sell its bitcoin.

“The bitcoin losses point out an important part of the Tesla investment case – its eccentric owner. While Musk’s impressive innovation has served the company well, his personal flair is starting to raise governance questions,” said Laura Hoy, analyst at Hargreaves Lansdown.

Total revenue fell to $16.93 billion in the second quarter from $18.76 billion a quarter earlier, ending Tesla’s streak of posting record revenue in recent quarters.

Analysts were expecting revenue of $17.10 billion, according to IBES data from Refinitiv.

(Reporting by Hyunjoo Jin in San Francisco and Nivedita Balu in Bengaluru; Editing by Anil D’Silva, Peter Henderson, Matthew Lewis and Leslie Adler)

By Hannah Lang

NEW YORK (Reuters) – Bitcoin rebounded after a brief sell-off late on Wednesday sparked by news that electric carmaker Tesla Inc had sold about 75% of its holdings of the virtual token.

Tesla Chief Executive Elon Musk cited concerns about his company’s “overall liquidity” as the reason for the sale.

The world’s largest cryptocurrency was last up 1.04% at $23,494.57, after sliding as much as 0.5% to $23,268.92 on the news.

Tesla sold $936 million worth of bitcoin in the second quarter, more than a year after the company bought $1.5 billion of the cryptocurrency at the peak of its massive growth and popularity.

Musk has been an outspoken supporter of cryptocurrencies. His statements on the future of crypto and disclosures about his ownership of digital assets often boost the price of dogecoin and bitcoin.

On Tesla’s earnings call, Musk said the primary reason for the sale was uncertainty about lockdowns due to COVID-19 in China, which have created production challenges for the company.

“It was important for us to maximize our cash position,” Musk said. “We are certainly open to increasing our bitcoin holdings in future, so this should not be taken as some verdict on bitcoin. It’s just that we were concerned about overall liquidity for the company.”

Musk added that Tesla did not sell any of its dogecoin, a meme-based cryptocurrency that he has touted.

Tesla accepted bitcoin as payment for less than two months before stopping in May 2021. Musk has said the company could resume accepting bitcoin once it conducts due diligence on the amount of renewable energy it takes to mine the currency.

Bitcoin has been in recovery mode so far this week, in line with the stock market, as investors appear more optimistic about the U.S. Federal Reserve’s ability to rein in decades-high inflation.

(Reporting by Hannah Lang, Gertrude Chavez-Dreyfuss and Nivedita Balu; Editing by Marguerita Choy, Richard Pullin and Richard Chang)

By Huw Jones and Sinead Cruise

LONDON (Reuters) – Britain’s reform of post-Brexit financial services is more about catching up with rivals than unleashing a ‘Big Bang 2.0’ as it sidesteps calls to cut taxes on banks or ease curbs on hiring foreign staff to keep London a force in global finance.

Before an audience of bankers in London’s historic City financial district on Tuesday evening, UK finance minister Nadhim Zahawi set out financial services legislation that will be put before parliament on Wednesday.

The long-trailed reforms were dubbed by Zahawi’s predecessor and Conservative Party leadership contender Rishi Sunak as a ‘Big Bang 2.0’, a reference to the deregulation of stock trading in the 1980s which placed the City of London at the heart of Europe’s financial industry.

But many of the bill’s core elements, such as regulating stablecoins and easing insurance capital rules, echo steps already taken by the European Union, disappointing those who eyed a faster, more dramatic makeover for Britain’s finance industry.

“The new Bill is a necessary first step for a reformed UK regulatory system, constructed on common law lines, allowing for a permissive but safer regulatory environment in the UK. However, this is only a first step,” Barney Reynolds, partner and Global Head of Financial Services Industry Group, Shearman & Sterling, said.

Since Brexit, the City has been largely locked out of the lucrative European Union market. But it remains Europe’s top-ranking finance hub by some distance, despite a gradual shift of jobs to the continent and the loss of equity and derivatives trading volumes to cities like Amsterdam and Paris.

Critics say the bill won’t reverse those changes.

“By leaving the EU single market it has cut itself off from the largest integrated retail market in the world, and one on its doorstep. Nothing in this bill will change that simple fact,” said Nicolas Mackel, CEO of Luxembourg for Finance, the development body for the country’s financial centre.

Backers of Brexit had argued that quitting the bloc would give Britain an opportunity to design a brand-new rulebook that would not only reinforce London’s status as Europe’s pre-eminent financial capital, but also steal market share from New York and Asian centres like Singapore and Hong Kong.

But Britain has opted against immediately ditching a crisis-era tax on bank balance sheets or paring ‘ring fencing’ rules which compel lenders with large domestic retail operations to hoard ‘rainy-day’ capital that might otherwise be used to boost returns.

It is keeping a regime for holding senior managers accountable for misconduct on their watch and left in place curbs on banker bonuses long-opposed by the Bank of England.

“There is a chasm between the rhetoric and reality,” a banking industry official said, pointing to the likely public backlash against such moves during a current cost of living crisis, he said.

NO HURRY

For now, it seems British lawmakers won’t be hurried into actions that distinguish the sector from other magnets for international capital.

Global banks, whose presence underpin London’s clout, don’t want different sets of rules that diverge from international norms given this increases costs, and nor do many of the start-ups who rely on free movement of talent and capital to seed their global businesses.

For now, burgeoning fintech firms who set up home in Britain will have to content themselves with government pledges to fast-track staff visas.

“The scope for the UK to set something really new is pretty minimal because God is on the side of the big battalions in regulation, the EU and United States,” said Graham Bishop, a former banker who has advised the EU on regulation.

Richard Gardner, CEO of U.S. tech firm Modulus said he feared a preoccupation with competitiveness last seen in the run-up to the 2008 financial crisis could push Britain to “double-down on newfound independence” and upend supervisory rules that keep bad actors at bay.

“History could be a warning. And the current economic situation, combined with tearing up the rulebook, so to speak, may lead to history repeating itself,” he said.

Brussels has also warned that if Britain diverges markedly from EU rules, the City will remain cut off from the bloc.

Divergence so far, however, has largely been in the pace of capital market reforms as the EU moves faster despite Britain wanting ‘nimbler’ regulators.

Britain has taken its time to see how the EU reforms insurers, regulates crypto-assets and how banks outsource key services. It has also delayed introducing new bank capital rules to align itself with the EU’s timetable, further undermining the ‘Big Bang 2.0’ concept.

“The Bill empowers the regulators to clean up the inherited-EU rules … but it doesn’t provide for the methods and parameters they should use to do that,” Reynolds said.

Nevertheless, Britain has diverged from the EU in some respects, such as scrapping curbs on “dark” or off-exchange stock trading to attract more global investors and easing capital buffers at insurers to encourage domestic infrastructure investment in a litmus test of Britain’s resolve to exploit Brexit “freedoms”.

Markus Ferber, a senior member of the European Parliament, believes the UK reforms will eventually amount to a substantial deregulation agenda, and ultimately rule out UK financial market access to the bloc in future.

“The Financial Services Bill is a clear signal that the UK is out to compete for financial services business with the EU,” Ferber said.

(Editing by Toby Chopra)

(Reuters) – Bitcoin rose 5.11% to $23,564.93 at 22:05 GMT on Tuesday, adding $1,145.77 to its previous close.

Bitcoin, the world’s biggest and best-known cryptocurrency, is up 33.9% from the year’s low of $17,592.78 on June 18.

Ether, the coin linked to the ethereum blockchain network, dropped 0.33% to $1,575.88 on Tuesday, losing $5.27 from its previous close.

(Reporting by Baranjot Kaur in Bengaluru)

By Huw Jones

LONDON (Reuters) – Regulators will have to promote the global competitiveness of Britain’s financial sector or could face mandatory reviews of their rules, UK finance minister Nadhim Zahawi said on Tuesday.

He confirmed that a long-awaited financial services and markets bill will be introduced before parliament on Wednesday to “capitalise on the benefits of Brexit and transform the UK financial services sector”.

Bankers have been calling for speedy reforms to bolster London’s attraction as a global centre for finance after Britain’s departure from the European Union.

Amsterdam has already overtaken London as Europe’s top share trading centre, prompting Britain to ease listing rules as it tries to persuade chipmaker Arm to have a UK listing.

Zahawi said the bill, which includes cutting “excessive” capital buffers at insurers to invest in infrastructure, will unlock “tens of billions of pounds”, a step which pits it against a more cautious Bank of England.

The bill also cracks down on financial scams, ensuring vulnerable people and rural areas have access to cash, and introduces rules for using stablecoins, a type of cryptoasset, for payments.

“Consumers will remain protected, with legislation ensuring that victims of scams can be compensated while also acting to protect access to cash for the millions of people that rely on it,” Zahawi told a Mansion House audience in the historic City of London financial district.

The Payment Systems Regulator will have powers to reimburse victims of so-called authorised push payment fraud, or when fraudsters deceive people into sending them money.

As trailed, regulators like the Bank of England and Financial Conduct Authority will be given a secondary objective to promote the global competitiveness of the financial sector, a requirement many regulators across the world already face.

Nevertheless, some lawmakers fear this could herald a return to “light touch” regulation which ended with banks being bailed out in the financial crisis.

Part of the bill shifts laws inherited from the EU to the rulebooks of regulators, making it easier to amend them in future but also giving the watchdogs far more influence at the expense of parliament.

As a counterbalance, the finance ministry had flagged it could grant itself “call in” powers to tell regulators to review a rule, if in the public interest.

Lawmakers have said this should be done sparingly, but Bank of England Governor Andrew Bailey warned last week the independence of regulators was part of London’s standing as a global financial centre.

Zahawi said call-in powers were still “under consideration”, indicating some caution.

Caroline Wagstaff, chief executive of the London Market Group, which represents the insurance market, said the new law would turbocharge the sector only if the competitiveness objective for regulators has real teeth.

“The bill absolutely must contain sufficient detail on how the regulators will be held to account on the issue of competitiveness or it will not achieve the regulatory culture change we need, and it will just be words on a page,” Wagstaff said.

Vincent Keaveny, Lord Mayor of the City of London, said a clear commitment is needed on setting out how regulators will focus more on competitiveness, without triggering a ‘race to the bottom’ in standards.

A government-sponsored review on Tuesday set out recommendations to speed up how listed companies can tap markets for extra funding, and Zahawi said all of them have been accepted by the government.

A new Digitisation Taskforce, chaired by former HSBC chair Douglas Flint, will drive modernisation in owning shares by eliminating paper certificates.

The government will also streamline the capital raising process by reforming the Companies Act to shorten rights issues and the processes around them, Zahawi said.

The first annual “State of the Sector” will be published on Wednesday to affirm the government’s “vision for the sector”.

(Reporting by Huw Jones; Editing by Chizu Nomiyama)

MILAN (Reuters) – Investment platform Trade Republic said on Tuesday it had registered with Italy’s crypto industry regulator as a cryptocurrency operator.

The admission to Organismo degli Agenti e dei Mediatori (OAM) has entered into effect on July 15, said Trade Republic, which started operating in the country in December.

The Italian legal entity of Binance, one of the biggest cryptocurrency exchanges, had also registered with the regulator in the country in May.

(Reporting by Federico Maccioni, editing by Cristina Carlevaro)

By Lisa Pauline Mattackal and Medha Singh

(Reuters) – If you’re waiting for a bitcoin recovery, you may have to sweat it out for months. That’s the conclusion of some technical specialists seeking method from the madness.

Bitcoin’s slide since May, swamped by economic angst, has knocked it below its 200-week moving average, at around $22,600, as well as its 200-day moving average around $35,500.

It’s now been moving relatively sideways for more than a month, hovering close to the 200-week moving average.

Valkyrie Investments, for one, says its research is pointing to an upside move – but that it isn’t clear when.

“Historically we’ve accumulated (around the 200-week average) for three to six months,” said Josh Olszewicz, Valkyrie’s head of research, referring to a period of sideways trading before a price break upwards.

Between late 2018 and early-2019, bitcoin spent nearly three months straddling the 200-week moving average.

In a gloomier scenario, though, bitcoin may not rally for about a year, Olszewicz added.

Moving averages smooth out wild price fluctuations to clean up the signal, or at least that’s the idea. Traders use longer-dated averages to find the next support or resistance levels.

Yet chart analysis based on historical price patterns is far from an exact science, particularly when it comes to the young, fast and furious history of crypto.

Some other technical indicators are signaling a wide range of potential levels of support for bitcoin, ranging from $20,000 to $12,000 – suggesting that the world’s biggest cryptocurrency could plunge anew.

This week, bitcoin is cruising just above its 2017 peak, but is over 68% below its all-time high of $69,000 hit last November.

‘FOUR STEPS DOWN, ONE UP’

Some see a pattern in the recent slump.

“The market is in a bear channel that started back in May,” said Eddie Tofpik, head of technical analysis at ADM Investor Services International. “It seems it is in a four steps down and one step up mode at the moment.”

Fibonacci retracement patterns, which aim to identify support and resistance levels, suggest bitcoin has found a moderate level of support between $19,500 and $20,000, said Patrick Reid, co-founder of FX consultancy the Adamis Principle.

Olszewicz at Valkyrie points to $12,000, a level bitcoin has not touched in nearly two years, as the next support.

In the absence of fundamental drivers, technical analysis has proved useful to identify some longer-term trading patterns for cryptocurrencies such as bitcoin.

For instance, a well-known “death-cross” chart pattern on Dec. 10 foreshadowed the bitcoin plunge that ensued. In early January, the 200-day moving average proved a strong resistance.

Such methods also come with dangers, as was proved this year when the implosion of stablecoin TerraUSD and its paired token Luna and subsequently hedge fund Three Arrows Capital caused crashes in all cryptocurrencies.

Spot trading of cryptocurrencies on major exchanges tumbled 27.5% in June to $1.41 trillion, the lowest level since December 2020, according to data from research firm CryptoCompare.

“Trust has come out of the market in a big way,” said Reid at Adamis Principle.

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

By Dietrich Knauth

(Reuters) – Cryptocurrency lender Celsius Network said bitcoin mining is key to the company’s restructuring efforts at a U.S. bankruptcy court hearing on Monday in Manhattan.

New Jersey-based Celsius received approval from U.S. Bankruptcy Judge Martin Glenn to spend $3.7 million in construction costs at a new bitcoin mining facility and $1.5 million on customs and duties on imported bitcoin mining rigs.

Patrick Nash, a lawyer for Celsius, told Glenn that bitcoin mining could provide a way for the company, which halted other business operations like its cryptocurrency lending, to repay customers, whose assets its froze in the weeks leading up to its bankruptcy filing.

“In a world where the crypto market rebounds, the mining business has the potential to be quite valuable,” Nash said.

Celsius filed for Chapter 11 protection on July 13, listing a $1.19 billion deficit on its balance sheet. Crypto lenders’ business model came under scrutiny following a sharp crypto market sell-off spurred by the collapse of major tokens terraUSD and luna in May.

Celsius’ assets shrank amid the extreme volatility, and its freezing of customer accounts was an attempt to stem losses and stabilize its business, Nash said.

Celsius hopes the mining effort will help it repair its relationship with customers, some of whom sent threats and hate mail to some company employees in the weeks before the Chapter 11 filing.

But a group of equity investors previewed a possible fight for control over the bitcoin mining operations. Dennis Dunne, the investors’ lawyer, said they may argue that the newly mined coins should be considered property of the UK subsidiary that raised the funds for the mining operation, rather than being distributed for the benefit of all Celsius creditors.

Customers might also object to Celsius’ spending on bitcoin mining vendors at a time when their own recovery is in doubt, the U.S. Department of Justice’s bankruptcy watchdog said.

(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and Leslie Adler)

(Reuters) – Coinbase Global Inc secured approval from Italian regulators to provide ongoing crypto services to customers in Italy, the cryptocurrency exchange said in a blog on Monday.

(Reporting by Akriti Sharma in Bengaluru; Editing by Rashmi Aich)

AMSTERDAM (Reuters) – The Dutch central bank (DNB) on Monday said it had fined Binance, one of the biggest cryptocurrency exchanges, 3.3 million euros ($3.35 million) for offering services in the Netherlands without being registered in the country.

The fine was issued in April 2022, following a public warning issued against Binance in August 2021, DNB said. The bank said in a statement that Binance in June had indicated it would appeal.

($1 = 0.9857 euros)

(Reporting by Toby Sterling; Editing by Catherine Evans)

By Hannah Lang, Elizabeth Howcroft and Tom Wilson

WASHINGTON/LONDON (Reuters) – Customers of crypto lender Celsius face a long and anxious wait to know how, when and even if they will get their money back after the company filed for bankruptcy, becoming one of the biggest victims of the collapse in crypto markets this year.

Citing extreme market conditions, Celsius froze withdrawals in June in a move that reverberated through the crypto world and beyond, spurring a $300 billion selloff in digital assets and leaving legions of retail investors cut off from their savings.

Celsius Network, which is based in the U.S. state of New Jersey, revealed a gaping $1.2 billion hole in its balance sheet when it filed for Chapter 11 bankruptcy in New York this week.

Customers should now buckle up for a bumpy ride as they await some clarity over the fate of their money, six lawyers specialising in bankruptcies, restructuring or crypto told Reuters.

With scant precedent for bankruptcies at large crypto companies, the prospect of multiple lawsuits against Celsius, as well as the high complexity of any restructuring, the Chapter 11 process is likely to be slow, the lawyers said.

“This could last for years,” said Daniel Gwen at Ropes & Grey law firm in New York. “It’s highly likely there’s going to be a lot of litigation.”

Celsius did not reply to requests for comment.

Crypto lenders boomed during the pandemic, attracting retail customers with double-digit rates rarely offered by traditional banks, in return for their crypto asset deposits.

On the flip side, institutional investors such as hedge funds paid lenders higher rates to borrow the coins, leaving firms such as Celsius to profit from the difference. Lenders also invested in riskier, so-called decentralised finance markets.

‘THREE-DIMENSIONAL CHESS’

When crypto markets slumped this year as surging inflation rates sparked a flight to safer assets and two major tokens – terraUSD and luna – failed, the riskier bets by lenders on wholesale crypto markets turned soured.

U.S. crypto lender Voyager Digital filed for bankruptcy this month too after suspending withdrawals and deposits, while smaller Singapore lender Vauld and Hong Kong-based Babel Finance have also frozen withdrawals.

Chapter 11 bankruptcies allow companies to prepare turnaround plans while remaining operational.

While major crypto firms have failed before, most notably the Japanese exchange Mt. Gox in 2014, there is little precedent for the treatment of customers at stricken crypto lenders, the lawyers said.

“It is, at best, unknown how the bankruptcy code and bankruptcy courts will be treating cryptocurrency companies,” said James Van Horn, partner at Barnes & Thornburg in Washington.

Creditor committees formed as part of bankruptcy proceedings will likely seek to shape any reorganisation plan decided by Celsius, three lawyers said. Creditors can also make claims against the company even as it goes through the process.

“It’s probably going to take, given the complexity, six months, at a minimum just to develop a plan to come out of bankruptcy,” said Stephen Gannon, partner at Davis Wright Tremaine. “This is going to be three-dimensional chess.”

In general, Chapter 11 bankruptcies prioritise repayments to secured creditors, then unsecured creditors, and then equity holders.

“(Unsecured creditors) have no earmarked rights to any funds or anything, everything’s been commingled,” Van Horn said. “Sometimes it’s a very small amount that unsecured creditors get.”

‘LAST ON THE LIST’

Celsius said in court filings this week that it had more than 100,000 creditors.

As of July 13, it had some 23,000 outstanding loans to retail borrowers worth $411 million, backed by crypto collateral worth $766 million, it said in a filing on Thursday.

While Celsius listed its largest 50 creditors, it made no mention of the order in which they would be repaid and many of its 1.7 million clients are individual investors.

One of them is Martin Jabou, 27, who lives in Hamilton, Canada. He put crypto assets worth about $45,000 into Celsius, though they are now worth less than half of that.

“I think we’re going to be last on the list,” he said of any repayments from the bankruptcy. “I don’t know how to afford rent or car payments, especially with the other debts that I have.”

Crypto lenders such as Celsius acted in a similar way to banks. But unlike for mainstream lenders, there is no safety net for people such as Jabou when crypto platforms fail.

At U.S. banks, deposits of up to $250,000 are insured by a federal body. Broker-dealer clients are insured for up to $500,000 in securities and cash by a separate body.

Similar deposit protection schemes exist in the European Union and Britain.

While it is not clear how Celsius will classify its clients, it did warn customers it may treat them as unsecured creditors – and customers are likely to litigate over such a status, said Max Dilendorf, a lawyer in New York specialising in crypto.

“It will be a one-of-a-kind case to see why customers should be classified as unsecured creditors,” he said.

(Reporting by Tom Wilson and Elizabeth Howcroft in London and Hannah Lang in Washington; Editing by David Clarke)

NUSA DUA, Indonesia (Reuters) – Indonesia central bank governor Perry Warjiyo on Saturday urged G20 members to remain focused on goals as the finance chiefs’ meeting in Bali remained overshadowed by Russia’s war in Ukraine, with no communique expected at the end.

He said the group had fruitful discussions on Friday on global economy, health and financial architecture, and said the G20 must deliver concrete results to support the global economy.

(Reporting by Fransiska Nangoy; Editing by Kanupriya Kapoor)

NUSA DUA, Indonesia (Reuters) – Indonesian Finance Minister Sri Mulyani Indrawati said on Friday failure by G20 finance chiefs meeting in Bali to reach consensus could be catastrophic for low-income countries amid soaring food and energy prices exacerbated by the war in Ukraine.

In her opening remarks to the meeting, Sri Mulyani said Indonesia would be an honest broker and find creative solutions to overcome the “triple threat” of surging commodity prices, global inflation and war.

(Reporting by Fransiska Nangoy, Stefanno Sulaiman, Andrea Shalal; Editing by Ed Davies)

SAN SALVADOR (Reuters) – Salvadoran Finance Minister Alejandro Zelaya minimized on Thursday the potential positive impact of a long-delayed deal with the International Monetary Fund, even as the highly indebted country stares down a possible medium-term default.

El Salvador announced it was negotiating a possible $1.3 billion loan with the IMF in March 2021, aimed at filling gaps in the Central American country’s budget and reducing high costs associated with the country’s debt, which in March surpassed $24 billion.

The deal’s future has looked uncertain since El Salvador rebuffed IMF calls for the government to reverse its decision to make bitcoin legal tender last September.

In his remarks on Thursday, Zelaya said discussions with the IMF continue but played down the deal’s fiscal impact, which he said would amount to less than 10% of the national budget.

“You have to put all these issues into context, but we’re maintaining conversations and once we have something concrete we will announce it.”

Analysts including ratings agency Moody’s say the deal would boost El Salvador’s credibility and help shore up its shaky finances.

“I’ve seen that some analysts believe that the deal with the IMF is going to completely improve the health of the country’s public finances, and no, it is one part of our strategy for improvement,” Zelaya said.

(Reporting by Nelson Renteria; Writing by Brendan O’Boyle; Editing by Sandra Maler)

(Reuters) – Celsius Network listed a $1.19 billion hole in its balance sheet in a Thursday filing in a Manhattan bankruptcy court, a day after the cryptocurrency lender filed for Chapter 11 bankruptcy.

The company also said it had $40 million in claims against Singapore-based Three Arrows Capital, a crypto hedge fund that filed for bankruptcy earlier this month.

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