(Bloomberg) — Federal Reserve Bank of Minneapolis President Neel Kashkari said Friday that the whole idea of cryptocurrency is “nonsense” after the implosion of FTX Group revealed the industry’s shortcomings.
A CFTC commissioner has urged crypto industry whistleblowers to come forward in the aftermath of FTX Group’s implosion, saying tipsters have previously received millions of dollars for their help.
Trading volumes on decentralized exchanges are up almost 11% this month to $62 billion, CryptoCompare data sourced from DefiLlama shows. Digital-asset investors are flocking to crypto’s decentralized heartland after witnessing the collapse of Sam Bankman-Fried’s FTX exchange.
Democratic lawmakers who received millions of dollars in campaign donations from the former FTX chief executive officer say they will be ready to grill him about the exchange’s collapse.
Key stories and developments:
- FTX Hammers More Nails Into Crypto’s Coffin: Lionel Laurent
- Eight Days Into FTX’s Bankruptcy Blow Up (Podcast)
- Crypto Informants Can Reap Millions From CFTC After FTX Blowup
- Ontario Teachers Writes Off FTX Stake, Citing Potential Fraud
- Billions of Dollars Flee FTX Woe to Crypto’s Decentralized Roots
(Time references are New York unless otherwise stated.)
Fed’s Kashkari Says the ‘Entire Notion of Crypto Is Nonsense’ (9:55 a.m.)
Federal Reserve Bank of Minneapolis President Neel Kashkari said Friday that the whole idea of cryptocurrency is “nonsense” after the implosion of FTX Group revealed the industry’s shortcomings.
“This isn’t case of 1 fraudulent company in a serious industry,” Kashkari said on Twitter, commenting on an article about how investors fell for FTX. “Entire notion of crypto is nonsense. Not useful 4 payments. No inflation hedge. No scarcity. No taxing authority. Just a tool of speculation & greater fools.”
Man Group Readies Crypto Hedge Fund Despite FTX Chaos (9:13 a.m.)
Man Group Plc is close to starting a dedicated cryptocurrency hedge fund, delving deeper into a market that’s reeling from the collapse of exchange operator FTX.
The world’s largest publicly-traded hedge fund firm has been developing the strategy led by money manager Andre Rzym for months, according to people with knowledge of the matter. The firm’s computer-led trading unit AHL is planning to start the fund as soon as the end of the year, said the people, asking not to be identified because the plan is private.
Crypto Informants Can Reap Millions From CFTC After FTX Blowup (7:46 a.m.)
A CFTC commissioner has urged crypto industry whistleblowers to come forward in the aftermath of FTX Group’s implosion, saying tipsters have previously received millions of dollars for their help.
Commodity Futures Trading Commission’s Kristin Johnson said on Thursday that informants would get anonymity, adding that such tips play a crucial role in enforcement given the opaqueness of some of the crypto world.
Billions of Dollars Flee FTX Woe to Crypto’s Decentralized Roots (6:30 a.m.)
Digital-asset investors are flocking to crypto’s decentralized heartland after witnessing the collapse of Sam Bankman-Fried’s FTX exchange.
Trading volumes on decentralized exchanges are up almost 11% this month to $62 billion, CryptoCompare data sourced from DefiLlama shows. Lending protocols such as Aave and Compound are also among those seeing strong user and transaction growth, analytics firm Nansen said. In contrast, depositors spooked by FTX have yanked cash from centralized exchanges.
Coinbase Cut to Neutral at BofA in Wake of FTX Collapse (6:30 a.m.)
Cryptocurrency exchange Coinbase was downgraded to neutral from buy at Bank of America due to uncertainty surrounding its outlook amid market turbulence.
“Coinbase likely faces a number of new headwinds” over the near to medium-term due to the collapse of FTX,” wrote analyst Jason Kupferberg, saying the company was not “immune from the broader fallout within the crypto ecosystem.”
Small-Cap Tech Decouples From Bitcoin Gyrations (5:07 a.m.)
Small-cap tech stocks have started to part ways with Bitcoin as both the crypto’s stock and related industry influence wane. Following the March 2020 low, rolling annual changes in Bitcoin’s US dollar cross rate and the Russell 2000 tech sector have been 0.95 correlated. And since Bitcoin’s peak, small-cap tech is down 38.5% versus a 75.4% drop in the crypto token.
It could be that Bitcoin represents overall risk tolerance in markets, spelling a rally for higher-growth small caps when rising. Or there could be a fundamental linkage: the sector weight of semiconductors — an integral part of Bitcoin mining — has dropped to 19.6% from 22.2%, since Bitcoin’s peak.
Fintechs Still Pushing Crypto, Distance Themselves From FTX (1:00 p.m. HK)
FTX’s bankruptcy filing last week is the latest headwind for fintech companies that have grown rapidly in tandem with the surge in digital asset trading.
Revolut, a finance app based in London, told users this week it did not have “material exposures” to FTX but was monitoring the situation. “This is a good reminder that crypto is very volatile: the value does go down, as well as up,” it said in an email. Crypto has already shrunk from about 35% of Revolut’s revenue last year to less than 5% this year.
Block Inc.’s Cash App, which allows consumers to transfer money or buy stocks and cryptocurrencies, said in a statement it was “Bitcoin-first” and committed to a “truly” decentralized payments system “not controlled by any person, bank, country, or corporation.”
Bitcoin Heads for a Weekly Gain (11:50 a.m. HK)
Bitcoin is up some 3% this week, topping global stocks, while a gauge of the leading 100 virtual coins has added about 0.5%. That compares with Bitcoin’s 23% slide last week as FTX collapsed.
Crypto historians might argue the counterintuitive Bitcoin performance will continue. Since a low in 2018, Bitcoin has posted a weekly loss of at least 20% six times apart from the recent slide. The token jumped almost 9% on average over the subsequent month, according to data compiled by Bloomberg.
Bahamas Regulator Takes Control of FTX Assets (8:00 a.m. HK)
The Bahamas Securities Commission said in a statement it directed the transfer of all digital assets of FTX Digital Markets, or FDM, to a wallet that the commission controls for safekeeping.
“Urgent interim regulatory action was necessary to protect the interests of clients and creditors of FDM,” it said, adding that its understanding is that FDM is not a party to US Chapter 11 bankruptcy proceedings. It said it would engage with regulators and authorities in multiple jurisdictions.
Ontario Teachers Writes Off FTX Stake (7:10 a.m. HK)
The pension plan said it will write down its stake in FTX to zero, taking a $95 million loss barely a year after making its first investment.
Teachers said the writedown will have only a “limited impact” because it’s less than 0.05% of the pension fund. “However, we are disappointed with the outcome of this investment, take all losses seriously and will use this experience to further strengthen our approach,” the fund said in a statement Thursday.
Bankman-Fried-Backed Lawmakers Ready To Grill Former CEO (5:01)
Lawmakers who received millions of dollars of campaign donations from Sam Bankman-Fried could soon get something else from the former FTX chief executive officer: testimony under oath.
Recipients of those political contributions say they’re prepared to grill Bankman-Fried about why his crypto exchange suddenly crashed, potentially causing billions of dollars in losses for millions of FTX account holders. Before the collapse, he donated tens of millions of dollars from his crypto-empire fortune to benefit Democrats, making him the second-largest donor to the party this election.
–With assistance from Amanda Fung, Dara Doyle and Taryana Odayar.
