Fintech files: The FBI is hunting for CryptoQueen while Vauld signals more market turmoil
The crypto winter only got even cooler, after Three Arrows Capital became the main victim of the downturn, and went into liquidation after weeks of uncertainty.
It ends a miserable second quarter for the sector, which has reverberated since stablecoin terraUSD and its interconnected token luna crashed in April. Bitcoin hovered around $ 19,000 on July 5th.
Three Arrows was co-founded by Zhu Su and Kyle Davies in 2012, and was one of the world’s largest cryptocurrency-focused hedge funds.
The situation got worse when Vauld, a cryptocurrency lender backed by Peter Thiel and Coinbase, suspended withdrawals, trading and deposits. The platform said on July 4 that it froze operations after users withdrew nearly $ 200 million over the past three weeks.
It comes after Celsius froze withdrawals in June. The crypto lender is still locked in rescue talks and was forced to cut around 150 more jobs. It has 650 employees listed on LinkedIn. A source with knowledge of the case told Financial news that rescue calls “Will continue … Plans [are] working.”
Whether this involves a proposal to use the customer base for support, revealed by the UN recently, remains to be seen.
Surprising surprise …
Looking ahead to the third quarter, experts do not expect a rapid recovery for crypto.
“If the market sees relief, I do not think we will see a sustained rise, due to the current macro environment,” said GlobalBlock analyst Marcus Sotiriou.
Meanwhile, Charley Cooper, CEO of blockchain firm R3, said sector leaders are likely to “continue to ignore growing pressure to mature into an innovative yet responsible industry.” Cooper is a former CEO of the US Commodity Futures Trading Commission.
Write it in the diary
On July 6, I will be hosting a live webinar with Gwendolyn Regina, Investment Director of Binance’s blockchain, BNB Chain, and Ari Redbord of the crypto intelligence group TRM Labs.
They will share their significant wisdom on how to navigate the increasingly stormy crypto landscape. Reserve your place here.
Crypto is most sought after
In news that will excite podcast enthusiasts around the world, Missing CryptoQueen – also known as Rucha Ignatova – has been added to not one, but two global most-wanted lists.
Ignatova founded OneCoin, the company that marketed a digital currency with the same name as the “bitcoin killer”. However, it has since been claimed to be a Ponzi scheme that defrauded vulnerable retail investors for $ 4 billion.
She has not been seen since 2017 and was the subject of a hugely popular BBC podcast, The missing crypto queenwhich traced the history of Ignatova and OneCoin until it was published in 2019.
Now she has been added to both Europol and the FBI’s 10 most wanted refugees. FBI special agent Ronald Shimko said he hopes the publication of the list of most wanted will bring more awareness around the case.
There’s a $ 100,000 reward for anyone who has information leading up to her arrest, so readers should watch out for a woman with brown hair and brown eyes – but who is probably wearing a disguise – and who by many accounts is a master manipulator.
Simple, right?
Brethren, cover your ears
Separately, the CEO of California-based asset manager Research Affiliates called cryptocurrencies a Ponzi scheme on June 30, claiming that bitcoin and the blockchain technology that underpins the world’s largest digital assets are helping with illegal activity.
“They are a Ponzi scheme that facilitates money laundering,” Chris Brightman told the United Nations when asked about his views on cryptocurrencies.
Regulations for the nations
Then it’s just as well that regulators – at least in Europe – are finally picking up.
A landmark agreement in the EU is set to bring stable coins such as tether and USD coins into a stricter regime to ensure that they can meet redemption requests during mass withdrawals.
The regulations agreed by legislators on June 30, known as Markets in Crypto Assets – or MiCA – will usher in new capital reserve levels for crypto suppliers. They will also see stack coins limited to € 200 million in transactions per day, should they become too large.
Transfers of bitcoin and other cryptocurrencies will also be subject to the same money laundering rules as traditional bank transfers under EU plans.
In the meantime, the European Securities and Markets Authority will have powers to ban or restrict crypto platforms that are considered not to provide sufficient protection to investors, or threaten the financial stability of markets more generally.
Adam Jackson, director of policy at the UK’s fintech industry body Innovate Finance, said the deal put the bloc “at the forefront of the global herd on speed and scale”.
“However, there is a risk of a complex and disproportionate system that could deter innovation. The devil will be in the details – and there will be many details when we see the final public text, he said.
“The extensive nature of MiCA has always led to the risk of trying to do too much prematurely in ways that could create disproportionate costs and constraints for some and could have unintended consequences.”
Meanwhile in the UK …
The trading body CryptoUK has said that the Ministry of Finance’s recent response to a consultation on travel rules for providers of crypto services contained “some gains”, but needed addressing in other areas.
The main feature of the Treasury’s response is that it does not believe that all asset transfers need to provide information about the sender and recipient when they are between unhosted wallets. An unhosted wallet is a crypto wallet that does not come from a regulated provider.
The information controls are considered by some to be necessary to prevent money laundering. Instead, the Treasury said that service providers will only be expected to collect identity information when the transfer is considered to pose a higher risk of criminal activity.
CryptoUK has gone out to the members to get feedback on the matter, after having been “in extensive conversations” with financial officials.
Further reading
The FCA’s error on P2P lending raises concerns about the cryptocurrency approach
A new trade rule to prevent a new crisis in 2008 is almost here – and it can blindside 800 companies
Zar Amrolia, LSE’s Julia Hoggett, JPMorgan and Swiss Exchange win top prizes at the UN Trading & Tech Awards
To contact the author of this story with feedback or news, email Alex Daniel
