Bitcoin’s recent plunge to its lowest value in over a year, suffering a significant drop of 50% since October, has ignited fears of a new “crypto winter.” Traders are seeking accountability, with many pointing fingers at Binance. The stark decline coincided with a disastrous liquidation event at Binance on October 10, leading some, including Ark Invest CEO Cathie Wood and OKX founder Star Xu, to suggest the exchange’s involvement in Bitcoin’s turmoil. Former SEC and CFTC official Salman Banaei has even called for a regulatory investigation into this recent flash crash, although Binance and its former CEO Changpeng Zhao refute any responsibility, claiming that criticisms stem from disgruntled traders seeking to recoup losses.
The repercussions of this downturn are now becoming evident, as market players endure a long fallout often characterized by a delay between a price collapse and the emergence of visible struggles. For instance, Gemini, the crypto exchange founded by the Winklevoss twins, has laid off 25% of its workforce, dismissed at least three top executives, and announced its exit from the UK, EU, and Australia. Despite the company’s efforts to frame the layoffs as a strategic pivot toward AI, analysts like Matthew Coad attribute the hardships to misguided bets on a continuous bull market in cryptocurrency.
Similarly, the crypto lender BlockFills halted withdrawals after suffering $75 million in loan losses tied to the plummeting crypto prices, leading to the sudden resignation of co-founder and CEO Nicholas Hammer, as the firm now seeks a buyer.
In unexpected news, the latest disclosures involving Jeffrey Epstein have cast a shadow over the crypto space. New emails reveal extensive communications between Epstein and crypto figures, notably Tether co-founder Brock Pierce, who had previously minimized their relationship to a few purely professional exchanges. The correspondence reveals more troubling discussions, including one where Pierce expressed a desire to introduce Epstein to a woman in New York. As reports unfold, it becomes evident that Epstein invested in Coinbase and Blockstream, raising ethical questions about these associations, especially given Epstein’s criminal history.
Simultaneously, the aftermath of the 2022 Terra (UST) stablecoin crash has spurred a lawsuit from Terraform Labs’ administrator against Jane Street, a major trading firm, alleging misuse of insider information to profit from Terraform’s collapse. The document claims that Jane Street exploited privileged connections within Terraform’s operations.
In legal developments, Sam Bankman-Fried, former CEO of FTX, is attempting to represent himself in an appeal for a new trial while simultaneously seeking a presidential pardon despite the White House’s clear disinterest in such a move. Meanwhile, Kevin O’Leary has won a $2.828 million default judgment against crypto influencer Ben “BitBoy” Armstrong for repeated defamatory statements.
As Congress continues to grapple with cryptocurrency regulation, the introduction of the Clarity Act remains stalled, partly due to Coinbase’s pushback. Concerns regarding potential foreign influence in the U.S. banking system have arisen, particularly in relation to a deal involving the UAE’s “spy sheikh” acquiring a significant stake in the cryptocurrency firm World Liberty Financial, ultimately benefiting family members of Trump.
The Senate has opened inquiries into Binance following revelations of internal investigations that allegedly uncovered misuse of the platform linked to Iranian entities. The company has denied these reports while facing skepticism given its history of dismissing credible criticisms.
Finally, the Commodity Futures Trading Commission (CFTC) has stepped into the arena of prediction markets, asserting jurisdiction while simultaneously experiencing staffing shortages. Its recent issuance of national trust bank charters to various crypto companies reflects an industry ongoing in transition amidst broad scrutiny.
Overall, significant shifts in the crypto landscape are underway, marked by economic turmoil, ethical controversies, and evolving regulatory challenges.
