In today’s cryptocurrency news, read about how, after the recent failure of the cryptocurrency exchange FTX, a group of U.S. senators have written another letter to investment firm Fidelity Investments, urging it to reconsider its decision to provide Bitcoin to its customers. Meanwhile, concerns that the demise of FTX will have a domino effect on the cryptocurrency business are affecting investors on all levels in the United States, from retail investors to large Wall Street firms. Many are asking if another cryptocurrency trading platform, Genesis, may go under next. Lastly, after Binance CEO Changpeng Zhao, commonly known as CZ, appeared to challenge Coinbase’s Bitcoin holdings in a tweet on November 22, Coinbase became a trending topic on Twitter.
After FTX Crash, Lawmakers Want Fidelity to Drop Bitcoin Retirement Plan
Original Source: Lawmakers Urge Fidelity to Drop Bitcoin Retirement Plan After FTX Crash
After the bankruptcy of crypto exchange FTX, U.S. Senators warned Fidelity Investments not to offer Bitcoin to customers.
Elizabeth Warren, Tina Smith, and Richard Durbin asked Fidelity to scrap its 401(k) Bitcoin plan.
Boston-based Fidelity is America’s leading supplier of 401(k) savings accounts. The company introduced a Bitcoin product for corporations and employees in April.
In May, Senators Warren and Smith told Fidelity it was a bad idea. This time, Senator Durbin signed a letter.
“We urgently encourage Fidelity Investments to reconsider its decision,” the letter said.
The fall of FTX, a cryptocurrency exchange, has shown the digital asset business has difficulties, the senators said.
“The industry is filled of charismatic wunderkinds, opportunistic crooks, and self-proclaimed investment advisors”
FTX, once a major cryptocurrency exchange, fell bankrupt this month after losing billions. The exchange used client money to make hazardous investments through Alameda Research.
FTX’s top 50 creditors owe $3.1 billion, according to a document filed Saturday.
FTX is also a major contributor to political campaigns; former CEO Sam Bankman-Fried gave $5.2 million to Joe Biden’s 2020 presidential campaign.
After the crash, most digital assets plummeted.
The U.S. is “already in a retirement security crisis” that “should not be made worse” by risking retirement resources.
Fidelity manages $9.9 trillion and has expanded into digital investments.
This month, it revealed an early-access waitlist for its next crypto product, an app that lets retail investors trade Bitcoin and Ethereum without commission fees.
Another Company’s Finances Raise Fears of Crypto Contagion
Original Source: Fears of crypto contagion are growing as another company’s finances wobble
Fears that the collapse of FTX will lead to greater disaster in the crypto business are affecting practically every US investor, from individuals to Wall Street firms. Many fear if Genesis, another cryptocurrency trading platform, will fall next.
So far, these concerns have not come true, and a Genesis representative told NPR on Tuesday, “Our goal is to handle the current lending problem without filing for bankruptcy.”
Genesis has reportedly warned investors that it may file for bankruptcy if it fails to rapidly raise $1 billion.
And Gemini has suspended redemptions and new loans.
In the decentralized system of digital currencies, where investor protections are weak, “crypto contagion” is a serious threat. Companies might opt out of traditional accounting procedures and controls, and their relationships can be opaque.
FTX and its 100+ affiliates served 1 million clients. That made its financial woes spread fast.
BlockFi, one of the companies FTX bailed out recently, has blocked client withdrawals, citing “substantial exposure to FTX and linked corporate entities.” The bank asked consumers not to deposit money.
When asked if it is near bankruptcy, the company’s press team said “there are a variety of alternatives” and it is “determining the best course ahead for our clients.”
The collapse of FTX isn’t restricted to corporations and investors having direct exposure to the bankrupt company. The collapse of the exchange, valued at more than $30 billion early this year, has fuelled volatility in crypto and caused cryptocurrencies and bitcoin to tumble even further.
It caused panic.
Investors took more than $400 million out of Gemini, founded by the Winklevoss twins, in a 24-hour period last week, Coindesk reported.
Binance and Coinbase have also witnessed large drawdowns, per Coindesk.
How FTX will influence Genesis
Unlike FTX, which concentrated on bringing average people into crypto, Genesis worked with major institutional investors.
Top of website: “Access institution. global”
In a series of tweets, Genesis said it has “no ongoing financing relationship with FTX or Alameda,” the crypto hedge fund created by former FTX CEO Sam Bankman-Fried.
But the corporation owns FTX’s coin FTT. From $79.53 to $1.50, its value has plummeted. And Genesis has $175 million in a locked FTX trading account.
Genesis reported lately that “FTX has produced unprecedented market instability, resulting in extraordinary withdrawal requests that have exceeded our present liquidity”
It’s in communication with Binance and Apollo Global Management, per The Wall Street Journal and Bloomberg News. Binance declined to comment and Apollo Global Management didn’t react.
Crypto Replies to Binance CEO’s Removed Post About Coinbase’s Bitcoin Holdings
Original Source: Crypto Twitter reacts to Binance CEO’s deleted tweet about Coinbase’s Bitcoin Holdings
Binance CEO Changpeng Zhao, known as CZ, tweeted on Nov. 22 that he questioned Coinbase’s Bitcoin holdings.
In a since-deleted tweet, CZ quoted a yahoo finance report that claimed Coinbase Custody holds 635,000 BTC for Grayscale. CZ commented, “4 months ago, Coinbase (I suppose exchange) had less than 600K,” with a link to an article from Bitcoinist. The Binance CEO said he was merely quoting “news reports” and not making any claims. His tweet was poorly welcomed by the crypto community.
Shortly after, Coinbase CEO Brian Armstrong implicitly reacted to CZ in a series of tweets, saying, “If you see FUD out there, remember, our financials are public (we’re a public business)” with a link to Coinbase’s Q3 shareholder letter. He emphasized that his company holds “2M BTC. $39.9B as of 9/30 (see our 10Q).
CZ withdrew his tweet shortly after, saying, “Brian Armstrong just told me the figures are inaccurate.” Deleted the preceding tweet. Let’s promote transparency in the industry.”
Given recent market developments and Binance’s alleged role in them, several have called out CZ for the insinuations. To summarize, FTX’s liquidation crisis, which led to a spiral in the market over the past two weeks, is thought by many to have been initiated by the Binance CEO after his tweets caused panic and a bank run on FTX.
Will Clemente, co-founder of digital asset research firm Reflexivity Research, tweeted, “That last tweet CZ made regarding Coinbase’s Bitcoin holdings he just deleted wasn’t a great look.” I appreciate the argument that he’s attempting to safeguard the business, but CZ is clever enough to know that exchange and custodial wallets are different.
Mario Nawfal, Founder & CEO of IBCgroup.io, tweeted: “Is CZ hinting Coinbase custody does NOT hold 1 to 1 BTC on behalf of Grayscale Trust?” See his recent tweet. This is a concern I never had before. This is a VERY serious question (implied accusation?) to ask.”
Analyst, trader, and investor @360 trader tweeted: “CZ just proven today he’s all about his empire. He’s NOT here to watch out for the industry; he erased the tweet. But now, as expected… He’s revealed himself as a villain.”
Trader and investor @BobLoukas called out CZ for his lack of due diligence before tweeting. He said, “CZ, let’s promote transparency in the industry.” Also CZ – Let me tweet to millions some random FUD in the middle of a bear market large liquidity event before maybe just calling out to confirm.”
Grayscale Investments said on Nov. 18 that all digital assets underlying its digital asset products are kept with Coinbase Custody Trust Company, LLC. Although the firm has declined to release on-chain proof of reserves or wallet addresses to show the underlying funds, citing “security concerns.” At the time of publication, Coinbase $COIN token had risen 5.3% in price.
Summary of today’s bitcoin and cryptocurrency news
To put it simply, the U.S. is “already in a retirement security crisis,” according to the letter published today, and the situation “should not be made worse by exposing retirement resources to undue risk.” As of now, Fidelity manages more than $9.9 trillion and has made significant advances in the digital asset space.
Meanwhile, there are few safeguards for investors in the decentralized system of digital currencies, making “crypto contagion” a serious risk. Companies might or might not follow generally accepted accounting practices, and the relationships between businesses might at best be unclear.
Lastly, investor and trader @BobLoukas criticized CZ on Twitter for not doing his homework before posting. CZ: “Let’s work together to promote industry openness,” he said. Also CZ – Before I maybe just call out to confirm, let me tweet to millions some random FUD in the midst of a bear market large liquidity event. Grayscale Investments said on Nov. 18 that Coinbase Custody Trust Company, LLC stores all of its digital assets. The firm has declined to give on-chain proof of reserves or wallet addresses, citing “security concerns.” At press time, Coinbase $COIN had gained 5.3%.