Caroline Ellison speaks on FTX-Binance war, SEC won’t appeal Grayscale BTC ETF: Hodler’s Digest, Oct. 8-14
Top Stories This Week
Caroline Ellison wanted to step down but feared a bank run on FTX
Caroline Ellison, former CEO of Alameda Research, testified for over 10 hours this week at Sam Bankman-Fried’s trial, offering deeper details on the events that anticipated the FTX debacle in November 2022. From Ellison’s testimony, jurors learned that she planned to leave Alameda months before its collapse, but feared a bank run on FTX amidst the crypto market downturn. The week also featured a recording presented as evidence in the case showing the exact moment Ellison told employees about Alameda’s use of FTX customer deposits. Among the key moments of Bankman-Fried’s trial were revelations of fabricated balance sheets in order to deceive crypto lenders, as well as BlockFi CEO Zac Prince’s testimony. Check out this week’s highlights from Cointelegraph’s team on the ground.
Months before the collapse of crypto exchange FTX, former CEO Sam Bankman-Fried was “freaking out” about buying shares in Snapchat, raising capital from Saudi royalty and getting regulators to crack down on rival crypto exchange Binance, according to evidence presented in court this week as a part of the ongoing criminal trial. Bankman-Fried believed Binance leaked an Alameda balance sheet to the media in 2022. According to a document from Nov. 6, 2022, Bankman-Fried wrote that Binance had been “engaging in a PR campaign against us.” It continued, saying that Binance “leaked a balance sheet; blogged about it; fed it to Coindesk; then announced very publicly that they were selling $500m of FTT in response to it while telling customers to be wary of FTX.”
SEC reportedly won’t appeal court decision on Grayscale Bitcoin ETF
The United States Securities and Exchange Commission reportedly has no plans to appeal the recent court decision that favored Grayscale Investments. The ruling requires the SEC to review the firm’s spot Bitcoin exchange-traded fund (ETF) application. The SEC’s supposed decision not to appeal doesn’t necessarily mean Grayscale’s application is set to be approved. If the reports are true, the SEC will need to follow the court’s August order and review Grayscale’s application to change its Grayscale Bitcoin Trust into a spot Bitcoin ETF.
Terraform Labs contends Citadel Securities had a hand in its stablecoin collapse
Terraform Labs has again pointed the finger at market maker Citadel Securities for its role in an alleged “concerted, intentional effort” to cause the depeg of its TerraUSD stablecoin in 2022. On Oct. 10, Terraform Labs filed a motion in the United States to compel Citadel Securities to produce documents relating to its trading activity in May 2022, when TerraUSD Classic depegged. In its motion, Terraform argued that the documents are crucial for its defense in the lawsuit filed by the U.S. Securities and Exchange Commission in February, which alleged Terraform Labs and its founder, Do Kwon, had a hand in “orchestrating a multi-billion dollar crypto asset securities fraud.” Citadel Securities has, however, previously denied trading the TerraUSD stablecoin in May 2022.
Mastercard announces successful wrapped CBDC trial results
Mastercard has completed a trial involving wrapping central bank digital currencies (CBDCs) on different blockchains, similar to wrapped Bitcoin and wrapped Ether. The trial was conducted with the Reserve Bank of Australia and the country’s Digital Finance Cooperative Research Centre CBDC. Mastercard said the solution allowed a CBDC owner to purchase a nonfungible token (NFT) listed on Ethereum. “The process ‘locked’ the required amount of a pilot CBDC on the RBA’s pilot CBDC platform and minted an equivalent amount of wrapped pilot CBDC tokens on Ethereum,” the payment processor wrote.
Winners and Losers
At the end of the week, Bitcoin (BTC) is at $26,892, Ether (ETH) at $1,551 and XRP at $0.48. The total market cap is at $1.05 trillion, according to CoinMarketCap.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Loom Network (LOOM) at 86.71%, Trust Wallet Token (TWT) at 16.72% and Tether Gold (XAUt) at 5.16%.
The top three altcoin losers of the week are Mantle (MNT) at -17.27%, Rocket Pool (RPL) at -14.39% and Avalanche (AVAX) at -13.39%.
For more info on crypto prices, make sure to read Cointelegraph’s market analysis.
Read also
Most Memorable Quotations
“That’s our homework, actually. To really educate people about the benefit of using blockchain.”
Grace Sabandar, co-founder of the Indonesia Blockchain and Metaverse Center
“Crypto-assets markets, including DeFi, do not represent meaningful risks to financial stability at this point.”
European Securities and Markets Authority
“I was worrying about customer withdrawals from FTX, this getting out, people to be hurt. […] I didn’t feel good. If people found out [about Alameda using FTX funds], they would all try to withdraw from FTX.”
Caroline Ellison, former CEO of Alameda Research
“It’s alarming and should be a wakeup call for lawmakers and regulators that digital wallets connected to Hamas received millions of dollars in cryptocurrencies.”
Elizabeth Warren, U.S. senator
“Bitcoin and Ethereum may seem like opposites, but they can co-exist and complement each other.”
Willem Schroé, CEO of Botanix Labs
“People who believe SBFraud is a ‘good guy’ who made ‘mistakes’, and FTX grew too fast and it all got away from him, should NEVER be in charge of other people’s money.”
John Deaton, attorney and crypto advocate
Prediction of the Week
Ethereum losing streak vs. Bitcoin hits 15 months — Can ETH price reverse course?
The price of Ethereum’s native token, Ether, is trading around a 15-month low versus Bitcoin, and the lowest since Ethereum switched to proof-of-stake. The ETH/BTC pair dropped to as low as 0.056 BTC earlier this week. In doing so, the pair broke below its 200-week exponential moving average (200-week EMA; the blue wave) near 0.058 BTC, raising downside risks further into 2023.
The 200-week EMA has historically served as a reliable support level for ETH/BTC bulls.
ETH/BTC stares at similar selloff risks in 2023 after losing its 200-week EMA as support. In this case, the next downside target looks to be around its 0.5 Fibonacci line near 0.051 BTC in 2023, down about 9.5% from current price levels.
Conversely, ETH price may rebound toward its 50-week EMA (the red wave) near 0.065 BTC if it reclaims the 200-week EMA as support.
FUD of the Week
Mistake or money laundering? User pays $1.6 million for CrypToadz NFT
One of the CrypToadz NFTs, whose average price doesn’t exceed $1,000, was bought for an astonishing 1,055 wrapped Ether, an equivalent of $1.6 million. The CrypToadz collection was launched during the NFT boom of 2021 and surpassed a trading volume of $38 million worth of Ether during its first 10 days on the market. The price paid by the anonymous user for the NFT raised questions among the community. Two weeks ago, this item was acquired for 0.95 ETH (around $1,600), only to be sold for a price a thousand times higher.
USDR stablecoin depegs to $0.53, but team vows to provide solutions
Real estate-backed stablecoin USDR lost its peg to the United States dollar after a rush of redemptions caused a draining of liquid assets such as Dai from its treasury. USDR, backed by a mixture of cryptocurrencies and real estate holdings, is issued by the Tangible protocol, a decentralized finance project that seeks to tokenize housing and other real-world assets. During the crisis, a trader reportedly exchanged 131,350 USDR for 0 USD Coin, resulting in a complete loss on investment.
HTX claws back $8M in stolen funds, issues 250 ETH bounty to hacker
Huobi Global’s crypto exchange HTX has confirmed the return of the funds stolen by a hacker in late September and issued a 250 Ether bounty after resolving the issue. One of HTX’s hot wallets was drained of 5,000 ETH on Sept. 25, worth roughly $8 million at the time. Shortly after the hack occurred, the firm contacted the hacker and claimed to know their identity. HTX ultimately offered to pay a 5% bounty worth around $400,000 and not to take any legal action if they returned 95% of the funds before a deadline of Oct. 2.
Beyond crypto: Zero-knowledge proofs show potential from voting to finance
An emerging cryptographic technology may provide help with two gaping 21st-century needs: Privacy and truth.
Eleanor Terrett on impersonators and a better crypto industry
Fox Business producer Eleanor Terrett’s following exploded after she began providing commentary on the SEC v. Ripple lawsuit.
SBF’s alleged Chinese bribe, Binance clarifies account freeze: Asia Express
SBF allegedly bribes Chinese officials with $150 million to unfreeze accounts, Binance justifies blocking Hamas users, meanwhile, Huobi hacker returns all $8M in stolen assets.
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Politics
Transport Secretary Louise Haigh downplays risk of empty shelves if farmers strike over inheritance tax
Shelves will not be left empty this winter if farmers go on strike over tax changes, a cabinet minister has said.
Louise Haigh, the transport secretary, said the government would be setting out contingency plans to ensure food security is not compromised if farmers decide to protest.
Farmers across England and Wales have expressed anger that farms will no longer get 100% relief on inheritance tax, as laid out in Rachel Reeves’s budget last month.
Welsh campaign group Enough is Enough has called for a national strike among British farmers to stop producing food until the decision to impose inheritance tax on farms is reversed, while others also contemplate industrial action.
At the weekend the group held a protest in Llandudno, North Wales, where Sir Keir Starmer was giving his first speech as prime minister to the Welsh Labour conference.
Politics latest: £3 bus fare cap could be scrapped after December 2025
Asked by Trevor Phillips if she was concerned at the prospect that shelves could be empty of food this winter, Ms Haigh replied: “No, we think we put forward food security really as a priority, and we’ll work with farmers and the supply chain in order to ensure that.
“The Department for Environment, Food and Rural Affairs will be setting out plans for the winter and setting out – as business as usual – contingency plans and ensuring that food security is treated as the priority it deserves to be.”
Politics latest: PM has no plans to meet Taliban at climate summit
From April 2026, farms worth more than £1m will face an inheritance tax rate of 20%, rather than the standard 40% applied to other land and property.
However, farmers – who previously did not have to pay any inheritance tax – argue the change will mean higher food prices, lower food production and having to sell off land to pay.
Transport Secretary Louise Haigh
Tom Bradshaw, the president of the National Farmers Union, said he had “never seen the united sense of anger that there is in this industry today”.
“I don’t for one moment condone that anyone will stop supplying the supermarkets,” he said.
“We saw during the COVID crisis that those unable to get their food were often either the very most vulnerable, or those that have been working long hours in hospitals and nurses – that is something we do not want to see again.”
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Farmers ‘betrayed’ over tax change
Explaining why the tax changes were so unpopular, he said food production margins were “so low”, and “any liquid cash that’s been available has been reinvested in farm businesses” for the future.
“One of the immediate changes is that farms are going to have to start putting money into their pensions, which many haven’t previously done,” he said.
“They’re going to have to have life insurance policies in case of a sudden death. And unfortunately, that was cash that would previously have been invested in producing the country’s food for the future.”
Sir Keir has staunchly defended the measure, saying it will not affect small farms and is aimed at targeting wealthy landowners who buy up farmland to avoid paying inheritance tax.
However, the Conservatives have argued the changes amount to a “war on farmers” and have begun a campaign targeting the prime minister as a “farmer harmer”.
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‘Farmers’ livelihoods are threatened’
Speaking to Sunday Morning With Trevor Phillips, shadow home secretary Chris Philp said he was happy with farmers protesting against the budget – as long as their methods and tactics were “lawful”.
“What the Labour government has done to farmers is absolutely shocking,” he said.
“These are farmers that, you know, they’re not well off particularly, they’re often actually struggling to make ends meet because farming is not very profitable these days. And of course, we rely on farmers for our food security.
Addressing the possible protests, Mr Philp said: “I think people have a right to protest, and obviously we respect the right to protest within the law, and it’s up to parliament to set where the law sits.
“So I think providing they’re behaving lawfully, legally, then they do have a right to protest.”
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Nigel Farage ‘living his best life’ in Clacton
UK doubles aid to Sudan to more than £110m
Next week farmers are expected to hold a mass protest of about 20,000 people in Westminster against the inheritance tax changes.
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