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2023-03-02 21:58:52
Events of the week
This week, the market will receive the inflation index report on Tuesday and the Fed rate announcement on Wednesday. These are the two main events that are of interest to investors.
Although the CPE index fell, the producer price index (PPI) increased, causing the stock market to fall on Friday. Wholesale prices rose more than expected in November as food prices rose, dampening hopes that inflation might ease. The index was up 0.3% in November and up 7.4% from a year ago. A 38% increase in wholesale vegetable prices helped push the food index up 3.3%, offsetting a similar 3.3% drop in energy costs.
Excluding food and energy, the core PPI rose 0.4%, also versus the estimate of 0.2%. Core PPI rose 6.2% from a year ago, compared with 6.6% in October.
Bad news from LBRY and SEC, how is Ripple affected?
As shared from LBRY, the reason they lost the SEC case was because the judge ruled that their tokens were securities according to three things:
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There is a large token holdings by whales
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The holding is public
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Tokens are actively working, the dev has improved the source code
Based on these three criteria, most cryptocurrencies have these three things and can all be concluded as securities.
Let’s take a look at Ripple, the company being sued by the SEC. If according to the above conditions, XRP is also a coin with many whales. Among them, Ripple company is the largest whale owning 5.6 billion XRP tokens and 44.3 billion tokens in escrow (for sale), while the total supply of XRP is only 100 billion. According to the definition above, Ripple is a security.
And the largest altcoin being mentioned is ETH if considered with the above conditions. There are also many ETH, but excluding exchanges and staking contracts (because this amount of ETH mostly belongs to the sender), we do not know who the big whales holding ETH are. Therefore, according to the definition above, ETH is not a security.
However, to determine whether a token is a security or not, current US law is based on the Howey Test standard. But the above definition of the judge in the LBRY case is not available according to the Howey test and there is no precedent for applying the above three standards before.
The judge in the SEC case against Ripple is different and may have a different opinion. This case has been going on since 2020 and it is reported that both sides are asking for an early decision, which is estimated to be between January 4 and January 15.
Many people, especially investors in the crypto market, want Ripple to win the lawsuit. Because it will mark the first company in the crypto market that can win a lawsuit with the SEC in a legal battle over whether a token is a security or not. Because very few companies have enough financial strength and perseverance to fight the SEC. However, the SEC has never lost a lawsuit in the crypto market. They are also a great power agency, so if they are weaker, they may ask for negotiations rather than losing the case.
Currently, there is a rumor about a lawsuit between the SEC and Ripple coming from Cardano (ADA) founder Charles Hoskinson. He has heard rumors that the Ripple case will be resolved on December 15th. The SEC and Ripple will have their own agreement and work together to resolve it. But if there is a clear decision from the judge, it will set a good precedent for future crypto projects that dare to stand up to fight the unreasonable lawsuits of the SEC.
Currently, the United States has many laws governing specific assets. However, applying it to a new market like crypto is not reasonable. Therefore, the crypto market needs a separate, clear law to be able to develop. Then, crypto businesses or investors will be bolder and stronger when it has a specific legal corridor.
Binance and Crypto.com Announce Assets
Crypto.com exchange has made public their audit documents conducted by the company Mazar Group in order to make transparent the assets they are holding on the exchange. Data to be announced on December 7 shows that their holdings are equal to or more than the amount of client assets deposited into their platform. Users can completely withdraw their entire amount on the exchange and Crypto.com can fully describe it.
However, amid the tension and confusion of the market, there is information released about Crypto.com. One posts About CNBC about the background of this exchange’s CEO made investors more nervous. Before founding Crypto.com, Kris Marszalek was involved in many business ventures and ended up going bankrupt.
Some of the companies mentioned like Marszalek founded a manufacturing company called Starline in 2004. Headquartered in Hong Kong, with a factory in mainland China, Starline built hardware products. such as solid state drives, hard drives and USB flash drives. The company went bankrupt in 2009 and owes more than $5 million.
Later, Marszalek and his partner established an offshore holding company called Middle Kingdom Capital based in the Cayman Islands. Middle Kingdom is the owner of Buy Together, which owns BeeCrazy, an e-commerce venture that Marszalek started pursuing. Similar to Groupon, retailers can use BeeCrazy to sell their products at a great discount. BeeCrazy will process payments, receive commissions for merchandise sold, and distribute funds to retailers.
In 2013, the company iBuy acquired BeeCrazy. A month and a half after buying BeeCrazy, iBuy listed on the US stock exchange. Marszalek renamed iBuy to Ensogo in an attempt to retool the company. Ensogo continues to face difficulties, losses in 2015 equivalent to more than 50 million USD. By 2016, this Ensogo company also went bankrupt.
Marszalek quickly moved on to his next job. The same month he resigned from Ensogo, Foris Limited was established, marking Marszalek’s entry into the crypto market. Foris Limited started with the crypto exchange Monaco. After that, Monaco was renamed to Crypto.com in 2018.
It can be seen that the information in the article is intended to emphasize that the risk of Crypto.com may be similar to the results of the companies that Marszalek once managed. In response to these pressures and FUD information, Kris Marszalek spoke out on Twitter. All but the business failures I’ve had so early in my career say nothing, he said. Because business is very difficult and bankruptcy is common. I also share pride in his battle scars and his lessons for the success it is today at Crypto.com.
And Binance also released a report on Binance crypto holdings verified by the company Mazars. According to the results announced on November 22, Binance is also holding 101% of the BTC customers deposit into their platform.
Although the document has been released, many people do not believe the Mazars company. They asked the exchanges to provide more company structure, shareholders and shares. However, usually companies will not go public unless companies listed on the stock exchange will have to do so as required.
With exchanges that issue their own tokens, there will also be questions about the ratio in the amount of reserve assets. Because investors are concerned that there may be a repeat like FTX used FTT to store customers’ assets. Binance is currently the largest exchange in the crypto market, accounting for more than 70% of the trading volume of all exchanges today.
According to CryptoQuant data, BNB accounts for about 10.7% of total assets on the Binance exchange. This is not a large percentage compared to the total assets on the floor.
CZ and SBF drama continues
Recently, CZ spoke out about billionaire Kevin O’Leary’s false statements about Binance exchange in interviews. Kevin O’Leary is a media ambassador for FTX and has been always saying well for Sam Bankman-Fried lately.
In interview, Kevin O’Leary said that the money lost by SBF must be used to buy back FTX shares from Binance. CZ says that this is not true and that this is an attack against Binance and him. He said that the reason FTX collapsed was because they invested a lot of money in projects but not all projects were successful. FTX has spent large sums of money on publicity, aggressive marketing, donations to legislators, and major real estate purchases.
Until the most recent interviews, Kevin O’Leary still said that SBF is innocent until proven guilty. But the reality that exists has shown a financial hole and a large amount of money has been lost.
Finally, CZ emphasized that the collapse of FTX did not come from the buyback of Binance shares. Binance saw that there were doubts, so it decided to sell shares of FTX and sell it back to SBF. Sam also made bad tweets about CZ and Binance. These controversies led CZ to openly dislike both Sam and Kevin O’Leary.
CEO of The Block resigns
The Block’s CEO, Michael McCaffrey, immediately resigned after his loans to FTX were exposed.
According to The Block, McCaffrey received three loans totaling $43 million between 2021 and this year. The first loan was worth $12 million in 2021 to buy out other investors in the media company and McCaffrey became chief executive. The second was $15 million in January 2022 to pay for the company’s operations and the third was $16 million earlier this year for McCaffrey to purchase personal real estate in the Bahamas.
Since McCaffrey became the CEO of The Block, this media channel has had many articles attacking Binance. Many times, CZ has stated that The Block’s articles are not true. Even after FTX collapsed, The Block continued to have good articles for SBF and FTX exchange.
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