Daily Digest - 16 November 2022

Headlines

▌Informed Sources: SBF May Go to the United States for Inquiries

According to three people familiar with the matter, the U.S. and Bahamian authorities have been discussing the possibility of bringing FTX founder SBF to the U.S. for questioning. Communications between law enforcement officials from both countries have intensified in recent days as they investigate the SBF’s role in the collapse of cryptocurrency firm FTX. SBF has been cooperating with Bahamian authorities, one of the people said. According to previous news, FTX founder SBF said that he would personally meet with the regulatory authorities, “My goal is to do the right thing for my clients.”

Policy

▌The European Union Plans to Ban Encrypted Tokens With Privacy

According to a leaked draft money laundering bill, the European Union may ban banks and cryptocurrency providers from trading privacy tokens such as Zcash, Monero, and Dash. Credit institutions, financial institutions and crypto asset service providers should be prohibited from retaining tokens with enhanced anonymity, according to draft legislation that has been circulated to the 26 other EU member states for comments. The document also proposes that crypto service providers doing business outside the EU would need to verify that their counterparties are licensed and verify what money laundering controls they have in place, with details of the review to be worked out by AMLA. In parallel amendments to the bill, lawmakers in the European Parliament focused on dealing with dirty money through the Metaverse, decentralized finance, and NFTs. The bill must be assented by the Council and the European Parliament before it becomes law.

▌Australian Regulator Suspends FTX Financial Services License

The Australian Securities and Investments Commission (ASIC) has suspended FTXAustralia's financial services license until May 15, 2023. In a statement, ASIC said FTXAustralia could continue to provide limited financial services related to the unwinding of existing derivatives contracts until December 19, 2022. According to previous news, after FTX filed for bankruptcy, at least 30,000 Australians were affected. FTXAustralia and its wholly-owned subsidiary FTXExpress were established in March this year and obtained an Australian financial services license after acquiring a local company called IFSMarkets. It is reported that FTXAustralia creditors plan to hold a meeting on November 23.

▌Chairman of the US Senate Banking Committee: Cryptocurrency May "Destroy the Traditional Financial System"

Sherrod Brown, chairman of the U.S. Senate Banking Committee, said at a hearing on Tuesday that cryptocurrencies could "destroy the traditional financial system." "We've seen them used for speculation and fraud, scams, evasion of sanctions, outright theft, hundreds of speculative cryptocurrencies that don't seem to have any benefit or use, the last thing we want is a risky new financial products crashing our financial system.” Brown’s Republican opponent, Senator Pat Toomey (R-Pennsylvania), pushed back on that notion in his questioning, saying, “You’re implying that they might have the ability to crash the financial system, but never, fundamentally, it’s not about the types of assets FTX is holding, it’s about what individuals do with those assets.”

Cryptocurrency

▌SBF: FTXUS Has Enough Funds to Repay All Customers

SBF tweeted that, as far as he knew, as of November 7 after the FTX turmoil, Alameda had more assets than liabilities, but had no liquidity. Alameda holds a margin position with FTX, and FTXUS has sufficient funds to repay all clients. The Wall Street Journal previously quoted people familiar with the matter as saying that SBF is still trying to raise new funds to make up for user losses, and worked with some remaining employees to seek investor commitments last weekend, but so far has not been successful.

▌CZ Proposes That a Healthy CEX Should Abide by Six Major Commitments

Binance founder Zhao Changpeng shared the six most important commitments that he believes centralized exchanges should abide by on Binance’s official blog, namely, 1. Customer funds should not be used to take risks. 2. Never use your own issued tokens as collateral. 3. Share real-time asset proof. 4. Keep adequate reserves. 5. Avoid excessive leverage. 6. Strengthen and enforce security protocols. According to previous news, Zhao Changpeng said on Monday that he was trying to create an industry organization to cooperate with global regulators.

▌Crypto.com CEO: The Withdrawal Queue Has Decreased by 98% in the Past 24 Hours

Kris Marszalek, CEO of Crypto.com, said on social media that the withdrawal queue on the platform has decreased by 98% in the past 24 hours. Support for normal operation under load. It follows news that Crypto.com has experienced withdrawal delays and that the company sent a sum of $400 million worth of cryptocurrency to Gate.io, another cryptocurrency exchange, in October this year. KrisMarszalek only acknowledged the mishap after the transaction was exposed via public blockchain data.

▌Foreign Media: FTX Is Seeking $10 Billion in Emergency Financing

According to the British Financial Times, FTX is seeking emergency funds of 6 billion to 10 billion U.S. dollars, and has sent quasi-investment letters of intent to potential investors. Namely, method (equity and conversion, etc.) and size (greater or less than 2.5 billion US dollars); the other is the so-called all-togetherset (AT), which is similar to a crowdfunding campaign with a minimum target. A total of more than 6 billion US dollars invested in FTX will involve the initiation of the overall portfolio investment, but investors cannot specify any investment terms.