Tag: Cryptocurrencies

(Reuters) – Crypto lenders, which boomed during the COVID-19 pandemic, have run into difficulties recently due to a slump brought on by the downfall of a major token in May and a global risk-off sentiment.

Below are some of the firms that have run into trouble recently:

Terraform Labs

The South Korea-based company, which is behind the dollar-pegged stablecoin TerraUSD and its paired token Luna, has plunged in value in May, sparking sell-offs and igniting a chain reaction.

The company’s co-founder, Do Kwon, announced in May a “recovery plan”, with additional outside funding and rebuilding of TerraUSD so that it is backed by reserves rather than relying on an algorithm to maintain its 1:1 dollar peg.

An official at South Korea’s Supreme Prosecutors’ Office said on June 21 that several employees of Terraform had been put on a no-fly list and cannot leave the country.

Voyager Digital

The U.S.-based crypto lender said on July 6 it had filed for bankruptcy.

In its Chapter 11 bankruptcy filing, Voyager estimated that it had more than 100,000 creditors and somewhere between $1 billion and $10 billion in assets, and liabilities worth the same value.

Three Arrows Capital (3AC)

The Singapore-based crypto hedge fund has entered liquidation on June 29, two days after receiving a notice of default from lender Voyager for failing to make payments on a crypto loan of about more than $650 million.

According to a court filing on July 1, the company was seeking protection from creditors under the U.S. bankruptcy code’s Chapter 15, which allows foreign debtors to shield U.S. assets.

Celsius Network

The lending company froze its withdrawal and transfer services, citing “extreme” market conditions, and has hired advisers on a possible bankruptcy filing.

On July 4, the American-Israeli company said it has laid off a quarter of its workforce, Calcalist reported.

Vauld

The Singapore-based company said on July 4 it had suspended withdrawals for its more than 800,000 customers. In a blog post, Vauld said it was facing “financial challenges” due to volatile market conditions.

“The financial difficulties of our key business partners inevitably affecting us,” the company said, adding that customers had withdrawn around $200 million since June 12.

Babel Finance

The Hong Kong-based crypto lender said it had temporarily suspend withdrawals and redemption of crypto assets on June 17, as the company scrambles to pay its clients.

“Due to the current situation, Babel Finance is facing unusual liquidity pressures,” the company said, highlighting high volatility of the digital currency market.

(Compiled by Dina Kartit; Editing by Maju Samuel)

By John McCrank and Megan Davies

(Reuters) – Sam Bankman-Fried, head of one of the largest cryptocurrency exchanges, FTX, said he and his company still have a “few billion” on hand to shore up struggling firms that could further destabilize the digital asset industry, but that the worst of the liquidity crunch has likely passed.

Bankman-Fried, 30, who is from California but lives in the Bahamas where FTX is based, has become crypto’s white knight in recent weeks, throwing lifelines to digital asset platforms which have faltered as cryptocurrencies prices have cratered. Bitcoin is down around 70% from its all-time November high of nearly $69,000.

“We’re starting to get a few more companies reaching out to us,” Bankman-Fried said in an interview. Those firms are generally not in dire situations, though some smaller crypto exchanges may still fail, he said, adding that the industry has moved beyond “other big shoes that have to drop.”

Bankman-Fried’s crypto-trading firm, Alameda Research, gave crypto-lender Voyager Digital a $200 million cash and stablecoin revolving credit facility, and a facility of bitcoin, as the company faced losses from exposure to crypto hedge fund Three Arrows Capital. On Wednesday, Voyager filed for bankruptcy.

Also in June, FTX handed U.S. cryptocurrency lender BlockFi a $250 million revolving credit facility and on Friday announced a deal giving FTX the right to purchase it based on certain performance triggers.

The goal of the bailouts was to protect customer assets and stop contagion from ricocheting through the system, Bankman-Fried said.

“Having trust with consumers that things will work as advertised is incredibly important and if broken is incredibly hard to get back,” he said.

In January, FTX unveiled FTX Ventures, a $2 billion venture capital fund focused on digital asset investments, which it has since drawn on to help bail out firms that are lacking liquidity, but not assets.

“It does get increasingly expensive with each one of these,” Bankman-Fried said, adding that the firm still had enough cash on hand to do a $2 billion deal if necessary.

“If all that mattered was one single event, we could get above a couple billion,” he said, stressing that isn’t his preference.

On one or two occasions, Bankman-Fried, who made billions arbitraging cryptocurrency prices in Asia beginning in 2017, said he has used his own cash to backstop failing crypto companies when it didn’t make sense for FTX to do so.

“FTX has shareholders and we have a duty to do reasonable things by them and I certainly feel more comfortable incinerating my own money,” he said.

Bankman-Fried also in May revealed he had personally taken a 7.6% stake in Robinhood Markets Inc, capitalizing on the trading app’s weakened share price.

Forbes pegged Bankman-Fried’s net worth this year at around $24 billion, but Bloomberg’s Billionaires Index in May said that figure has been cut in half due to the crypto crash.

CRYPTO WINTER

As the U.S. Federal Reserve has begun aggressively hiking rates to combat hyperinflation, investors have fled the crypto markets.

The crash in cryptocurrency prices, referred to as “crypto winter,” may have bottomed, as prices have stabilized, but it will largely depend on the macro-economic situation, said Bankman-Fried, a 2014 graduate of the Massachusetts Institute of Technology.

“I don’t think it’s an existential threat to the industry, but I do think it is a fair bit worse that I would have anticipated,” Bankman-Fried said.

Bankman-Fried started his career in finance at quantitative trading firm Jane Street, then founded crypto trading firm Alameda Research and in 2019 set up FTX, which was valued in January at $32 billion.

He has said he plans to give away 99% of his wealth, and that he could spend up to $100 million supporting candidates in the 2024 election cycle, focusing on issues like pandemic prevention and bipartisanship.

While rival crypto exchanges face layoffs after earlier hiring sprees, FTX has around 300 employees, and Crunchbase pegs Alameda’s staff at fewer than 50.

“Every quarter this year, I expect our workforce to be bigger than the previous quarter, but we’re trying not to grow insanely quickly,” he said.

(Reporting by John McCrank and Megan Davies in New York; additional reporting by Hannah Lang in Washington; Editing by Chizu Nomiyama)

(Reuters) – Voyager Digital has filed for bankruptcy, the crypto lender said in a statement on Wednesday, a week after suspending withdrawals, trading and deposits to its platform as it sought additional time to explore strategic alternatives.

In its Chapter 11 bankruptcy filing on Tuesday, Toronto-listed Voyager estimated that it had more than 100,000 creditors and somewhere between $1 billion and $10 billion in crypto assets. The company also recorded the same range for its liabilities.

Chapter 11 bankruptcy procedures put a hold on all civil litigation matters and allow companies to prepare turnaround plans while remaining operational.

“The prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital on a loan from the company’s subsidiary, Voyager Digital, LLC, require us to take deliberate and decisive action now,” Voyager Chief Executive Officer Stephen Ehrlich said.

Many of the crypto industry’s recent problems can be traced back to the spectacular collapse of so-called stablecoin TerraUSD in May, which saw the stablecoin lose almost all its value, along with its paired token.

(Reporting by Shivam Patel in Bengaluru; Additional reporting by Ann Maria Shibu; Editing by Sherry Jacob-Phillips)

By Elizabeth Howcroft

(Reuters) – The NFT dream isn’t dead, but it’s taken a big non-fungible beating.

The market shone gloriously last year as crypto-rich speculators spent billions of dollars on the risky assets, pumping up prices and profits. Now, six months into 2022, it’s looking ugly.

Monthly sales volume on the largest NFT marketplace, OpenSea, plunged to $700 million in June, down from $2.6 billion in May and a far cry from January’s peak of nearly $5 billion.

By late June the average NFT sale sunk to $412, from $1,754 at the end of April, according to NonFungible.com, which tracks sales on the Ethereum and Ronin blockchains.

“The crypto bear market has definitely had an impact on the NFT space,” said Gauthier Zuppinger, co-founder of NonFungible.com.

“We have seen so much speculation, so much hype around this kind of asset,” he added. “Now we see some sort of decrease just because people realise they will not become a millionaire in two days.”

The NFT market has collapsed along with cryptocurrencies, which are typically used to pay for the assets, at a time when central banks have jacked up rates to combat inflation, and risk appetite has withered.

Bitcoin lost around 57% in the six months of the year, while ether has dropped 71%.

Graphic: Monthly NFT sales volume on OpenSea marketplace, https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwbzbjvo/Monthly%20NFT%20sales%20volume%20on%20OpenSea%20marketplace.png

DIP OR DEATH SPIRAL?

For critics, the crash confirms the folly of buying such assets, tradable blockchain-based records linked to digital files such as images or videos, often artwork.

The Malaysian businessman who bought an NFT of Jack Dorsey’s first tweet for $2.5 million last year struggled to get bids of more than a few thousand dollars when he tried to re-sell it in April.

But Benoit Bosc, global head of product at crypto trading firm GSR, sees the downturn as the perfect time to build a corporate NFT collection – the crypto equivalent of the fine art traditional banks display to impress clients.

Last month, GSR spent $500,000 on NFTs from what Bosc calls “blue-chip” collections – those with large online fan bases.

His purchases include an NFT from the Bored Ape Yacht Club, a set of 10,000 cartoon monkeys made by U.S.-based company Yuga Labs and promoted by the likes of Paris Hilton and Jimmy Fallon.

Such is the hype surrounding Bored Apes that Yuga Labs raised $285 million in April by selling tokens it says can be exchanged for land in a Bored Apes-themed virtual world it has not yet launched.

Yet the average sale price for a Bored Ape tumbled to around $110,000 in June, having halved since its January peak of $238,000, according to market tracker CryptoSlam.

In his New York office, Bosc put up three screens on which to display his NFTs, which include various pixelated characters and a Bored Ape bought for $125,000.

“For us, it’s also a brand exercise,” Bosc said. Owning a valuable NFT and using it as a profile picture on social media is a way to establish “respectability, authority and influence” in the crypto sphere, he said.

Graphic: Average NFT sale price per week, https://fingfx.thomsonreuters.com/gfx/mkt/klvykryrbvg/Average%20NFT%20sale%20price%20per%20week.png

GAME OVER? GAME ON?

Nonetheless, the future of NFTs is distinctly uncertain, as the era of low interest rates which encouraged investors to take risky bets comes to an end.

Some market watchers say the influence of NFTs on the art market will shrink. Meanwhile, even though the much-hyped vision for a blockchain-based metaverse hasn’t materialised yet, enthusiasts expect NFTs to shake up the gaming industry, for example by allowing players to own in-game assets such as avatar skins.

“Everyone believes games are going to be the next big thing in blockchain,” said Modesta Masoit, chief financial officer at blockchain tracker DappRadar.

This risky combination of gaming and financial speculation may face difficulties, though. Most gamers prefer games which do not include NFTs or “play-to-earn” components, according to John Egan, CEO of technology research firm L’Atelier.

Although the groundbreaking new crypto regulations agreed by the European Union last week mostly excluded NFTs, Spain is separately seeking to clamp down on the way video games sell virtual assets for real money.

Meanwhile, the biggest NFT-based game, Axie Infinity, has seen its in-game token collapse to less than half a cent, down from a peak of 36 cents last year.

For L’Atelier’s Egan, the NFT market is unlikely to recover in its current form.

“Ultimately it’s a situation where extraordinary amounts of money are being paid for extraordinarily limited assets that don’t really produce any cash flow,” he said.

But the underlying concept of creating unique digital assets is still “fundamentally important” and will have “massive applications” for the financial sector in future, he said.

Graphic: Quarterly NFT sales volume by type, https://fingfx.thomsonreuters.com/gfx/mkt/dwpkrmbmqvm/Quarterly%20NFT%20sales%20volume%20by%20type%20across%2015%20top%20blockchains.png

(Reporting by Elizabeth Howcroft; Editing by Pravin Char)

SHANGHAI (Reuters) – A hacker has claimed to have procured a trove of personal information from the Shanghai police on one billion Chinese citizens, which tech experts say, if true, would be one of the biggest data breaches in history.

The anonymous internet user, identified as “ChinaDan”, posted on hacker forum Breach Forums last week offering to sell the more than 23 terabytes (TB) of data for 10 bitcoin, equivalent to about $200,000.

“In 2022, the Shanghai National Police (SHGA) database was leaked. This database contains many TB of data and information on Billions of Chinese citizen,” the post said.

“Databases contain information on 1 Billion Chinese national residents and several billion case records, including: name, address, birthplace, national ID number, mobile number, all crime/case details.”

Reuters was unable to verify the authenticity of the post.

The Shanghai government and police department did not respond to requests for comment on Monday.

Reuters was also unable to reach the self-proclaimed hacker, ChinaDan, but the post was widely discussed on China’s Weibo and WeChat social media platforms over the weekend with many users worried it could be real.

The hashtag “data leak” was blocked on Weibo by Sunday afternoon.

Kendra Schaefer, head of tech policy research at Beijing-based consultancy Trivium China, said in a post on Twitter it was “hard to parse truth from rumour mill”.

If the material the hacker claimed to have came from the Ministry of Public Security, it would be bad for “a number of reasons”, Schaefer said.

“Most obviously it would be among biggest and worst breaches in history,” she said.

Zhao Changpeng, CEO of Binance, said on Monday the cryptocurrency exchange had stepped up user verification processes after the exchange’s threat intelligence detected the sale of records belonging to 1 billion residents of an Asian country on the dark web.

He said on Twitter that a leak could have happened due to “a bug in an Elastic Search deployment by a (government) agency”, without saying if he was referring to the Shanghai police case. He did not immediately respond to a request for further comment.

The claim of a hack comes as China has vowed to improve protection of online user data privacy, instructing its tech giants to ensure safer storage after public complaints about mismanagement and misuse.

Last year, China passed new laws governing how personal information and data generated within its borders should be handled.

(Reporting by Brenda Goh, Sophie Yu, Stella Qiu, Eduardo Baptista and Josh Ye; Editing by Robert Birsel)

(Reuters) – Cryptocurrency exchange Coinbase Global Inc said on Friday it was looking to expand in some European markets, even as the digital asset market continues to experience a downturn.

The company is in the process of expanding in France, Italy, Spain and the Netherlands, it said in a blog post, adding that it was aiming to launch its retail, institutional and developer products in all those markets.

In June, Coinbase slashed 1,100 jobs, constituting nearly 18% of its workforce.

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

By Huw Jones and Tom Wilson

LONDON (Reuters) – The European Union on Thursday reached a provisional deal on the world’s first set of comprehensive rules to regulate what one lawmaker called the “Wild West” crypto market.

WHAT ARE THE NEW RULES?

Crypto firms that want to issue and sell digital tokens in an EU state will have to obtain a licence from a national regulator.

The licence will allow operators to serve the whole 27-country bloc from one base, and be liable for losing cryptoassets from consumers’ digital wallets.

Currently, firms show an EU national regulator they have adequate controls to stop money laundering, but can only operate within that country.

National watchdogs must update the EU’s securities watchdog ESMA about any large operators they have authorised, which stops short of lawmaker calls for a European watchdog for the sector.

SO THE RULES ARE ALREADY IN EFFECT?

Not yet.

The deal needs formal rubberstamping by EU states and the European Parliament before it comes into effect – likely 2023 at the earliest.

The rules will apply to some tokens such as “stablecoins” – crypto pegged to traditional currencies or commodities that aim to keep a steady value – 12 months from the day the law comes into force. For other tokens, the rules will apply 18 months after the start date.

Crypto firms that already comply with anti-money laundering controls will also be given 18 months to obtain licences under new law, without disrupting service.

ARE STABLECOINS A BIG ISSUE?

For sure.

The collapse in May of the terraUSD stablecoin triggered a sharp sell-off in crypto markets and worried regulators.

The EU rules will give holders of stablecoins the right to claim their money back free of charge. Issuers of the tokens will have to hold minimum levels of liquidity, and will be overseen by the EU’s European Banking Authority.

Crypto firms must have a registered office in the bloc to issue stablecoins, and coins based on non-European currencies will be constrained to preserve “monetary sovereignty.”

Crypto industry officials say it will become harder to make money under such rules.

AND NON-FUNGIBLE TOKENS?

It’s complicated. Lawmakers wanted non-fungible tokens (NFTs) under the new rules, but EU states opposed.

That led to a compromise where NFTs are not included, but if they become fungible – mutually replaceable – regulators can force them to comply with crypto rules. If they act like traditional securities, the EU’s stringent MiFID markets rules can come into play.

The European Commission will assess within 18 months whether standalone rules are needed for NFTs.

WHAT ABOUT CRYPTO AND CLIMATE CHANGE?

Bitcoin’s energy use is a big worry for lawmakers.

Crypto firms will have to disclose their impact on the environment and climate change, using standards that the ESMA securities watchdog will draft.

The European Commission will assess within two years the environmental impact of cryptoassets and introduce mandatory sustainability rules, including on the energy-intensive “proof of work” system used for “mining” crypto such as bitcoin.

WHAT ARE OTHER COUNTRIES DOING?

Japan blazed a trail among major economies by introducing a crypto law in 2017, forcing exchanges to register with its financial watchdog.

Others have been slower.

In the United States, there is no federal framework in place, though individual states do have crypto-specific rules. Senators unveiled this month a bill to set out new rules and hand the bulk of oversight to commodities regulators, though it’s unclear when the rules would be approved.

Britain said in April it would introduce rules on stablecoins, leaving most cryptocurrencies and related firms subject only to patchy regulation.

(Reporting by Huw Jones and Tom Wilson; Editing by Mark Potter)

By Huw Jones and Tom Wilson

LONDON (Reuters – Cryptocurrency companies will need a licence and customer safeguards to issue and sell digital tokens in the European Union under groundbreaking new rules agreed by the bloc to tame a volatile “Wild West” market.

Globally, crypto assets are largely unregulated, with national operators in the EU only required to show controls for combating money laundering.

Representatives from the European Parliament and EU states thrashed out a deal late on Thursday on its Markets in Crypto-assets (MiCA) law.

“Today we put order in the Wild West of crypto assets and set clear rules for a harmonised market,” said Stefan Berger, a German centre-right lawmaker who led negotiations on behalf of the parliament.

“The recent fall in the value of digital currencies shows us how highly risky and speculative they are and that it is fundamental to act,” Berger said.

Crypto markets have tumbled this year, pressured by the collapse of the terraUSD stablecoin and the freezing of withdrawals and transfers by major U.S. crypto lender Celsius Network.

Bitcoin, the biggest token, has slumped some 70% since its November record of $69,000, dragging down the overall market.

PROTECTING CONSUMERS

The landmark regulation confirms the EU’s role as a standard-setter for digital issues, EU states said.

“With the new rules, crypto-asset service providers will have to respect strong requirements to protect consumers’ wallets and become liable in case they lose investors’ crypto-assets,” they added.

The deal will need formal rubberstamping by the European Parliament and EU states to become law, followed by an implementation period.

The new law gives issuers of crypto assets and providers of related services a “passport” to serve clients across the EU from a single base.

Holders of stablecoins – a type of crypto designed to hold a steady value – will be offered a claim at any time and free of charge by the issuer, with all stablecoins supervised by the bloc’s banking watchdog EBA.

Robert Kopitsch, secretary general of the Blockchain for Europe lobby group that includes the major exchanges Binance and Crypto.com, said the rules were “a mixed bag”.

“Thanks to last-minute changes, we also fear that stablecoins will basically have no ways to be profitable,” Kopitsch said.

AFME, a financial markets industry body, said the rules would bring certainty, reduce fragmentation and underpin the development of a robust and well-functioning market.

More clarity is needed, however, to ensure that custodians of crypto assets are only on the hook in cases of negligence or misconduct, and not for events beyond a custodian’s control, such as a nation state hack, AFME said.

Finance Watch, which promotes the public interest in finance, said the rules will protect consumers, and it welcomed the new role for EBA after the difficulties faced by stablecoins.

NFT COMPROMISE

Many states, including Ireland, Lithuania and Greece, have long opposed including non-fungible tokens (NFTs), which are digital assets representing objects from art to videos.

But under pressure from EU lawmakers, the compromise reached on Thursday night foresees that “NFTs will be excluded from the scope except if they fall under existing crypto-asset categories”.

Brussels will assess within 18 months whether standalone rules are needed for NFTs.

National regulators will be responsible for licensing crypto firms, but they will have to keep the EU’s securities watchdog ESMA informed about large operators.

ESMA will develop standards for crypto companies to disclose information on their environmental and climate footprint.

The United States and Britain, two major crypto centres, have yet to approve similar rules.

The company behind the major USD Coin stablecoin called the rules “a significant milestone.”

“While no comprehensive body of rules is perfect … it nonetheless provides practical solutions to issues that other jurisdictions are just beginning to grapple with,” U.S. firm Circle said in a blog.

(Additional reporting by Francesco Guarascio in Brussels and John O’Donnell in Frankfurt; Editing by Mark Potter, Jonathan Oatis, Gareth Jones and Paul Simao)

By Pete Schroeder

WASHINGTON (Reuters) – The U.S. commodities regulator announced on Thursday it had filed civil charges against a South African man and his company for operating a fradulent commodity pool worth over $1.7 billion in bitcoin.

The Commodity Futures Trading Commission (CFTC) said the fraud scheme, which saw the firm solicit bitcoin online from thousands of people to purportedly operate a commodity pool, was the largest it had ever pursued involving the cryptocurrency. The CFTC filed charges against Mirror Trading International Proprietary Limited and its CEO, Cornelius Johannes Steynberg.

Steynberg had been a fugitive from South African law enforcement but was recently detained in Brazil on an INTERPOL arrest warrant, the CFTC said. He could not be immediately reached for comment.

The CFTC said in its complaint that the company claimed to have proprietary software that would realize significant trading gains for investors who pooled their bitcoin with it, but in reality no such “bot” existed.

In reality, only a small portion of the pooled bitcoin was ever invested, at a loss, and the rest was “misappropriated,” according to the CFTC. The company ultimately filed for bankruptcy in 2021, shortly after which South African authorities launched a fraud investigation.

The CFTC said approximately 23,000 Americans invested in the pool.

(Reporting by Pete Schroeder; Editing by David Gregorio)

(Reuters) – Bitcoin dropped 6.1% to $18,866.77 at 2004 GMT on Thursday, putting the biggest and best-known cryptocurrency down $1,226.41 from its previous close and down 60.9% from the year’s high of $48,234 on March 28.

Several big players in the cryptocurrency markets have had difficulties, and further declines could force other crypto investors to sell holdings to meet margin calls and cover losses.

Ether, the coin linked to the ethereum blockchain network, dropped 7.5% to $1,016.08 on Thursday, losing $82.38 from its previous close.

Both digital assets have struggled since U.S. based lender Celsius Network this month said it would suspend withdrawals. Bitcoin and ether were further rattled by the apparent insolvency of crypto hedge fund Three Arrows Capital, which a person familiar with the matter told Reuters has entered liquidation.

Many of the industry’s recent problems can be traced back to the spectacular collapse of so-called stablecoin TerraUSD in May, which saw the stablecoin lose almost all its value, along with its paired token.

(Reporting by Mrinmay Dey in Bengaluru and Hannah Lang in Washington; Editing by David Gregorio)

(Reuters) – Retail crypto lending platform Celsius Network said on Thursday it was exploring options including deals and restructuring its liabilities.

Celsius earlier this month froze withdrawals and transfers citing “extreme” market conditions, leaving its 1.7 million customers unable to redeem their assets. (https://bit.ly/3bHo3Cf)

The company hired restructuring consultants from advisory firm Alvarez & Marsal to advise on a possible bankruptcy filing, the Wall Street Journal reported last week, citing people familiar with the matter.

The market for digital assets has in recent months been roiled by extreme volatility as investors dump risky assets on fears that aggressive interest rate hikes to tame stubborn inflation could plunge the economy into recession.

(Reporting by Manya Saini in Bengaluru; Editing by Shounak Dasgupta)

By Luc Cohen

NEW YORK (Reuters) – A German citizen accused of defrauding investors out of $4 billion by selling a fake cryptocurrency called OneCoin has been added to the FBI’s list of its ten most-wanted fugitives, U.S. officials said on Thursday.

Ruja Ignatova, also known as “Cryptoqueen,” was charged in 2019 with eight counts including wire fraud and securities fraud for running the Bulgaria-based OneCoin Ltd as a pyramid scheme. Prosecutors say the company offered commissions for members to entice others to buy a worthless cryptocurrency.

“She timed her scheme perfectly, capitalizing on the frenzied speculation of the early days of cryptocurrency,” said Damian Williams, the top federal prosecutor in Manhattan.

Williams described OneCoin as “one of the largest Ponzi schemes in history.”

Ignatova disappeared in late 2017 after bugging an apartment belonging to her American boyfriend and learning he was cooperating with an FBI probe into OneCoin, Williams said. She boarded a flight from Bulgaria to Greece and has not been seen since, he said.

The FBI is offering a $100,000 reward for information leading to Ignatova’s capture, said Michael Driscoll, the FBI’s assistant director-in-charge in New York.

Driscoll declined to comment on any leads as to where Ignatova might be. The bureau adds fugitives to its most-wanted list when it believes the public may be able to assist with tracking suspects down.

“She left with a tremendous amount of cash,” Driscoll told reporters. “Money can buy a lot of friends, and I would imagine she’s taking advantage of that.”

Ignatova was charged alongside Mark Scott, a former corporate lawyer who prosecutors said laundered around $400 million for OneCoin. Scott was found guilty of conspiracy to commit money laundering and conspiracy to commit bank fraud following a three-week trial in Manhattan federal court.

(Reporting by Luc Cohen in New York; Editing by Noeleen Walder)

By Huw Jones

LONDON (Reuters) – Banks should take a conservative approach to setting aside capital to cover risks from “unbacked” crypto assets on their books, the global Basel Committee of banking regulators said in proposals on Thursday which now also cover blockchain.

Cryptoassets have tumbled in value in recent weeks partly triggered by the collapse of terraUSD, a stablecoin whose value was derived by complex algorithmic processes.

As a result, regulators like the Basel Committee are worried about the potential risks to the financial system from the lightly regulated crypto sector even though it is still small relative to the size of global stock, bond and derivatives markets.

The proposals on Thursday mark Basel’s second public consultation on cryptocurrencies, which would require banks to take a conservative stance when setting aside capital for crypto holdings.

The Committee’s proposal said cryptoassets which are not backed by assets like traditional currencies, and stablecoins that do not have effective stabilisation mechanisms, should continue to be subject to a conservative prudential treatment with regard to capital set aside for potential losses.

It also proposed a new limit on gross exposures to such cryptoassets.

In June last year, Basel had published a first consultation on the crypto sector, which proposed that banks must hold enough capital to cover losses on any bitcoin holdings in full.

Basel said it was keeping the basic structure of that first proposal, which divided cryptoassets two broad groups, one including stablecoins, and the other higher risk cryptoassets, which would require the more conservative capital treatment.

The latest Basel proposals include new elements such as extra capital to cover “evolving risks” from distributed ledger technologies or blockchain, which underpins cryptoassets.

The committee said it will continue to monitor market developments to see if the proposals need toughening further.

The committee, made up of banking regulators from the world’s main financial centres, said it plans to finalise the rules by year-end.

(Reporting by Huw Jones. Editing by Jane Merriman)

By Akriti Sharma and John McCrank

(Reuters) – Grayscale Investments said on Wednesday it had sued the U.S. Securities and Exchange Commission after the regulator rejected the digital asset manager’s proposal to list a spot bitcoin exchange-traded fund (ETF).

The SEC had said Grayscale’s proposal to list the ETF did not meet the standard designed to prevent fraudulent practices and protect investors. (https://bit.ly/3yw4Nko)

“If regulators are comfortable with ETFs that hold derivatives of a given asset, they should logically be comfortable with ETFs that hold that same asset,” Grayscale said, referring to the SEC’s approval of ETFs based on bitcoin futures.

Grayscale, one of the world’s biggest digital asset managers, had proposed creating the ETF as a conversion of its Grayscale Bitcoin Trust [GBTC.PK]. It was seeking to get the ETF listed on NYSE Arca, which is owned by Intercontinental Exchange Inc.

In rejecting more than a dozen proposals for spot bitcoin ETFs over the past year, the SEC has focused on a lack of surveillance-sharing agreements with a regulated market of significant size relating to the underlying assets.

Issuers of spot bitcoin ETFs rejected by the SEC in recent months include Fidelity, SkyBridge and Valkyrie, all of which sought to provide easy exposure to the digital currency.

The SEC’s rejection of Grayscale’s application did not rest on “an assessment of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment,” the regulator said.

The price of bitcoin, the largest digital currency, has plunged more than 70% from its high of around $69,000 in November.

Other cryptocurrencies and crypto-related stocks have also declined in recent months as investors dumped riskier assets in response to high inflation and policy tightening by major central banks.

(Reporting by Akriti Sharma in Bengaluru and John McCrank in New York; Additional reporting by Niket Nishant; Editing by Leslie Adler, Bradley Perrett and Devika Syamnath)

By Chris Taylor

NEW YORK (Reuters) – When Doug Milnes started buying cryptocurrencies in January of this year, he felt like it could become an entirely new asset class for investors.

Right now what it is making him feel is extremely unsettled.

The marketing executive from Summit, New Jersey, says his holdings, including a number of different cryptocurrencies like ethereum, are down around 60% from where he bought. What was 2% of his portfolio is now around 0.8% – making him wring his hands about whether to hold on, head for the exits, or buy the dip.

“Crypto has gone through a number of booms and busts over time, and it’s hard to know if this time is different,” Milnes says. “I don’t know if my feelings are clouding my judgment. It’s hard to feel confident about what to do next.”

It has certainly been a harrowing year for crypto, and Milnes is not alone in trying to make sense of the plummeting charts. Total market capitalization of crypto assets has gone from almost $3 trillion in November 2021 to roughly $900 billion as of June 29, according to the tracker CoinMarketCap.

Meanwhile, bitcoin – the dominant cryptocurrency – fell from a high of more than $67,000 to its current level just below $20,000.

“Some people set up their portfolios in the euphoria of the last few years, without much thought about a bigger plan,” said Christine Benz, director of personal finance for investment research firm Morningstar. Recent losses, she adds, are a good impetus to ask yourself some questions, including how much risk can you take and what kind of losses can you withstand?

“If you didn’t go through that process on the front end, it’s worth thinking through now,” Benz said.

Of course, crypto is hardly alone in flying through heavy 2022 turbulence. The stock markets officially dipped into bear territory earlier in June – the S&P 500 is down more than 19% year-to-date as of Wednesday, and the Nasdaq is down more than 28% over that time frame.

The unique nature of crypto has skeptics likening any moves now to “closing the barn door after the horse has bolted,” said Peter Palion, president of Master Plan Advisory in East Norwich, New York. “Except on further thought, a horse is a real thing with a real value, and crypto – as John Paulson famously said – is a limited supply of nothing.”

No matter what your personal stance on crypto, the key to handling extreme market moves is having a plan in place, so you do not act out of pure panic. A few tips from the experts:

REEVALUATE YOUR RISK TOLERANCE

If this year’s crypto swoon has made you realize you are not equipped to handle such swings, then do not assume even more risk.

After all, just because there have been heavy losses, that does not rule out more losses to come. “If you find yourself unduly rattled, maybe you’re not a good candidate for holding that asset class,” said Benz. “There’s no shame in that.”

WRITE OFF LOSSES

It may seem like cold comfort, but if you have lost value in crypto transactions, you can write off a certain amount come April 15.

“For clients who have a large position in crypto we recommend using this time to tax loss harvest,” said Kevin Lum, founder and CEO of Foundry Financial in Los Angeles.

Losses function the same as they would for equities, Lum said. If your losses exceed your total capital gains for the year, you can deduct up to $3,000 against your ordinary income. “Losses beyond $3,000 can be carried forward until death to offset future gains.”

LIMIT PORTFOLIO ALLOCATION

As with any more speculative investment, it is wise to keep it to a certain percentage of your holdings – a particular “bucket” that will not swamp the rest of your portfolio.

“A good framework is to set an upper threshold,” said Benz. “Think of all your speculative assets in totality, and give them a 5% or 10% position in your portfolio – whether crypto, or precious metals, or microcap companies, or anything else.”

For example, even though Doug Milnes’ crypto portfolio has been savaged, it is not like he bet his entire future on it.

“There is a lot of uncertainty about what to do next, but at least I’m not worried about my retirement,” he said. “My advice to other crypto investors would be, don’t put all your eggs in one basket.”

(Reporting by Chris Taylor in New York; Editing by Lauren Young and Matthew Lewis; Follow us @ReutersMoney)

BRUSSELS (Reuters) – Investment company Jacobi Asset Management said on Thursday that it would launch Europe’s first bitcoin exchange-traded-fund (ETF) on the Euronext exchange, in a further sign of the cryptocurrency’s appeal despite its volatile price swings.

The company said its Jacobi Bitcoin ETF will begin trading in July on the Euronext Amsterdam Exchange under the ticker symbol of ‘BCOIN’.

Earlier this month, Bitcoin dropped to as low as $17,592.78, falling below the key $20,000 level for the first time since December 2020. Bitcoin, the largest digital currency, is down about 70% from its high of around $69,000 in November.

(Reporting by Sudip Kar-Gupta; Editing by Jacqueline Wong)

By Josh Smith

SEOUL (Reuters) – North Korean hackers are most likely behind an attack last week that stole as much as $100 million in cryptocurrency from a U.S. company, three digital investigative firms have concluded.

The cryptoassets were stolen on June 23 from Horizon Bridge, a service operated by the Harmony blockchain that allows assets to be transferred to other blockchains.

Since then, activity by the hackers suggests they may be linked to North Korea, which experts say is among the most prolific cyber attackers. U.N. sanctions monitors says Pyongyang uses the stolen funds to support its nuclear and missile programmes.

The style of attack and high velocity of structured payments to a mixer – used to obscure the origin of funds – is similar to previous attacks that were attributed to North Korea-linked actors, Chainalysis, a blockchain firm working with Harmony to investigate the attack, said on Twitter on Tuesday.

That conclusion was echoed by other investigators.

“Preliminarily this looks like a North Korean hack based on transaction behaviour,” said Nick Carlsen, a former FBI analyst who now investigates North Korea’s cryptocurrency heists for TRM Labs, a U.S.-based firm.

There are strong indications that North Korea’s Lazarus Group may be responsible for this theft, based on the nature of the hack and the subsequent laundering of the stolen funds, another firm, Elliptic, said in a report on Thursday.

“The thief is attempting to break the transaction trail back to the original theft,” the report said. “This makes it easier to cash out the funds at an exchange.”

If confirmed, the attack would be the eighth exploit this year – totalling $1 billion in stolen funds – that could be attributed to North Korea with confidence, accounting for 60% of total funds stolen in 2022, Chainalysis said.

North Korea’s ability to cash in on its stolen assets may have been complicated by the recent drop in cryptocurrency values, experts and South Korean officials told Reuters, possibly threatening a key source of funding for the sanctions-strapped country.

(Reporting by Josh Smith)

(Reuters) – Cryptocurrency exchange Coinbase Global Inc has renewed focus on its expansion in Europe and is in the process of registering in markets including Italy, Spain, France and the Netherlands, Bloomberg News reported on Wednesday.

“In all these markets our intention is to have retail and institutional products,” the report quoted Nana Murugesan, Coinbase’s vice president of business development and international, as saying in an interview.

The company is already registered in the United Kingdom, Ireland and Germany, and recently hired its first employee in Switzerland, Murugesan said.

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

The move comes weeks after the company slashed more than 1,000 jobs in the United States amid a downturn in the crypto sector.

Prices of digital assets have dived recently as rising interest rates and surging inflation prompt investors to ditch risky assets. That selloff has driven Coinbase shares more than 80% lower so far this year.

(Reporting by Manya Saini in Bengaluru; Editing by Aditya Soni)

(Reuters) – European Union (EU) negotiators have agreed on anti-money laundering rules for cryptocurrencies, the European Parliament said in a statement on Wednesday, in the latest sign that regulators are tightening up the freewheeling sector.

The rules would require crypto firms such as exchanges to obtain and hold information on those involved in cryptocurrency transfers, and provide it to competent authorities if an investigation is conducted.

Once written, the rules will have to be approved by several bodies before it can take effect.

“The new rules will enable law enforcement officials to be able to link certain transfers to criminal activities and identify the real person behind those transactions,” said Ernest Urtasun, a Spanish Green Party lawmaker, who helped to steer the measure through the European parliament.

(Reporting by Akriti Sharma in Bengaluru; Editing by Josie Kao)