Why did Bitcoin fetch $27,000? No one is surprised by Gensler’s actions, says Crypto CEO

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Good morning. Here is what happens:

Price: Bitcoin and other cryptos rally, despite further SEC action.

Insights: Both Binance and FTX have been accused of mixing assets, but there are differences.

Prices

CoinDesk Market Index (CMI)

1,180

+48.4 4.3%

Bitcoin (BTC)

$27,204

+1443.7 5.6%

Ethereum (ETH)

$1,884

+72.0 4.0%

S&P500

4,283.85

+10.1 0.2%

Gold

$1,980

+22.1 1.1%

Nikki 225

32,506.78

+289.3 0.9%

BTC/ETH price by CoinDesk indices, as of 7 a.m. ET (11 a.m. UTC)

Bitcoin regains lost ground

With a few zigzags along the way, bitcoin shrugged off Securities and Exchange (SEC) Enforcement Week to rally above $27,000 on Tuesday for the first time since the weekend.

The largest cryptocurrency by market capitalization was recently trading at $27,200, up 4.3% in the past 24 hours. BTC sank nearly $25,400 on Monday within hours of the SEC announcing a lawsuit against Binance, the world’s largest crypto exchange by trading volume. But bitcoin started rising slightly at the end of the day and continued to rise even as the SEC announced a second lawsuit against Binance rival Coinbase on Tuesday, and later in the day asked a federal court. to grant a temporary restraining order to freeze the related assets. at Binance.US.

The fact that the market rebounded leads me to believe that this was at least partially factored in, wrote Joshua Franklin, CEO and co-founder of digital asset information services platform The Tie, in an email to CoinDesk. No one is surprised by Gensler’s actions.

Read more: Coinbase traders withdraw $600 million in one day amid SEC lawsuits

Ether also spent much of Tuesday on the upside to trade near $1,900, a 4% gain from the same time on Monday. Binances exchange token BNB, which recently fell around 2% per day after plunging more than 10%. ADA and SOL, the tokens of smart contract platforms Cardano and Solano, have regained shards of lost ground amid lawsuit aftershocks, with the former rising by around half a percentage point and the latter by more than 1. %. The Polygons MATIC Layer 2 platform was down about 1.5%. In its filing, the SEC identified these tokens among 13 as unregistered securities.

The story continues

The CoinDesk Market Index, a measure of crypto market performance, rose 4.8%.

Fueled by AI euphoria and recent gains from several tech giants including chipmaker Nvidia, the Nasdaq Composite and the tech-heavy S&P 500 both rose slightly, with the former hitting its highest level in 10 months and the second in over a year.

The Ties Franklin noted that institutional investors remain ambivalent months after the dramatic collapse of FTX crypto exchanges in November and the increasingly tough US regulatory environment.

Read more: Latest SEC crackdown could drive crypto firms out of the US

Many funds invested in FTX were burned and some partners who ran their companies’ FTX deals were fired, Franklin wrote. As a result, many VCs feel nervous about getting into crypto. There is a similar concern among institutional allocators like pensions and endowments that have been widely burned on their past crypto allocations.

Franklin added that even hedge funds, which not too long ago were accelerating their participation in the crypto space faster than any other institutional group, have also applied the brakes, amid concerns about regulation, the lack of credit and viable places to trade in the US, limited custody options, and the anxiety of doing business with digital asset companies that may not survive in the wider crypto contagion.

Read more: Why isn’t Bitcoin falling more? Cryptos Act More Like Commodities Than Securities

These are just some of the many concerns they have, Franklin said, although he added more optimistically that we are seeing significantly more positive developments in Europe and Asia.

The biggest winnersThe biggest losersInsights

Binance and FTX’s alleged co-mixes are not the same

Binance is facing a lawsuit from the Securities and Exchange Commission (SEC) alleging poor financial controls and misuse of customer funds. A few weeks earlier, internal control issues took center stage in a Reuters report accusing it of mixing customer and company funds, which the company’s communications director denied.

It might be tempting to compare and contrast the accusations that Binance mixed funds with those against FTX, which also mixed funds.

However, these comparisons are superficial. Although they can both be described as intertwining, the process and implications are different.

In its complaint, the SEC suggests that billions of dollars in client funds were accessible to entities linked to Binance CEO Changpeng CZ Zhao, namely market makers Merit Peak and Sigma Chain. Among the SEC allegations, $200 million was transferred from BAM Trading, a Binance-related entity, to Sigma Chain, another CZ-controlled entity, and a Binance bank account sent $62.5 million CZ.

If that’s true, it’s hard to call it anything other than mixing.

But missing here is any mention of BNB, its native exchange token.

The core issue for FTX is FTT, and how it played a role at Alameda Research.

As CoinDesk reported last November, a large portion of Alameda’s assets consisted of FTT tokens, which were issued by FTX. This arrangement has raised huge questions about the interdependence of the two entities, especially since the value of the FTT token is partly backed by FTX’s own activities.

Alameda, a market maker and investor, was a major player in the crypto economy at the time; thus, the market was dutifully concerned about how much Alameda’s investment power was printed out of thin air.

This is not the case for BNB. Binance is not an investor like Alameda was, and BNB does not make up the material part of anyone’s balance sheet.

Of course, Sam Bankman-Fried also later admitted to not segregating client accounts, which later became part of the prosecutors’ case against him. And that sounds a lot like what CZ is accused of. However, Binance’s accusations revolve more around the alleged embezzlement of customer funds and interference in US operations, while the issues with FTX/Alameda relate to blurred lines between the two entities and the non-segregation of customer funds. clients.

Similar things, but different.

Well see in the weeks to come how much CZ empire it takes.

Important events.

The Non Fungible Conference (Portugal)

Brussels Blockchain Week (Belgium)

CoinDesk TV

In case you missed it, here’s the most recent episode of “First Mover” on CoinDesk TV:

Crypto Markets Fall After SEC Charges Coinbase and Binance

Crypto markets remained down as the SEC announced it was charging Coinbase to operate as an unregistered stock exchange, broker and clearing agency. The announcement came less than a day after the SEC accused Binance of multiple securities violations. Ashley Ebersole, 0x Labs Chief Legal Officer, weighed in on the details. Additionally, Vetle Lunde, K33 Senior Analyst, dived into how markets react to developing news.

Securities

Atomic wallet hacked by North Korean hackers: Elliptical wallets that siphoned funds from Atomic users are connected to known addresses of the Lazarus Group, the crypto-tracing firm said.

Gary Genslers evolves his stance on quote-unquote crypto: The SEC Chairman has gone from supporting technology at MIT to a full-scale offensive on the crypto industry.

Optimism Completes Bedrock Hard Fork, in Pursuit of Superchain: The developers behind the Layer 2 scaling solution for Ethereum say the upgrade will reduce gas fees and reduce deposit confirmation times.

One-Two Punch Finally Records SEC View on Binance, Coinbase, Rest of Crypto: Mystery Solved on How U.S. Securities and Exchange Commission Will Come After Big Platforms in the Digital Asset Industry, Though the alleged skeletons in the Binances closet sparked more anger.

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