Elon Musk tweets that “20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher”.
Traders wonder whether he tries to negotiate a better price or walk away from the deal.
If the deal falls apart, Tesla stock could gain upside momentum.
Tesla Stock Rebounds After Musk Says He Needs Proof That Fake/Spam Accounts Are Less Than 5% Of Twitter Users
Shares of Tesla gained upside momentum in premarket trading after Elon Musk tweeted that his offer to buy Twitter was based on the assumption that Twitter‘s SEC filings on the number of fake/spam accounts were accurate.
He also noted that Twitter’s CEO refused to show proof that fake/spam accounts were less than 5% of the total account number. Musk added that the deal could not move forward until he sees proof of Twitter’s statements.
Traders are trying to guess whether Musk is trying to walk away from the deal without paying the breakup fee or trying to negotiate a better price.
Both scenarios are bearish for Twitter stock, so it’s not surprising to see that Twitter is losing ground in premarket trading.
For Tesla stock, the recent news is bullish. Traders are worried that Musk will have to sell more Tesla stock to finance the deal, so a lower priced deal or a full collapse of the deal would serve as bullish catalysts.
What’s Next For Tesla Stock?
There are two main catalysts for Tesla in the near term. The first catalyst is the fate of the Twitter deal. If the deal is scrapped, traders will have no worries about potential stock sales from Musk, which will provide more support to Tesla shares.
The second catalyst is the situation with coronavirus in China, which has already put pressure on both production and demand for Tesla cars. At this point, it looks that developments in China could serve as a bigger catalyst for the stock, so traders will need to keep a close eye on the country in the upcoming weeks.
It should be noted that Tesla’s valuation has recently declined to more attractive levels, so the stock may be sensitive to positive catalysts. In this light, Tesla will have a good chance to gain additional upside momentum in case Twitter deal continues to fall apart.
The U.S. Department of Justice has laid the first criminal charges for using cryptos to evade sanctions.
The accused individual has approximately sent $10 million in bitcoin to a sanctioned nation.
The accused proudly stated that the service could circumvent U.S. sanctions, forgetting crypto’s ease of traceability.
The U.S. Department of Justice might charge an unnamed American over “willfully violating” international sanctions by sending millions in cryptocurrency.
Possibly the first criminal prosecution of crypto-related sanction evasion, the case was revealed by District of Columbia Magistrate Judge Zia Faruqui in an official opinion ruling on Friday.
Over $10 million transferred to a sanctioned country
However, the Judge did not mention the name of the payment platform used for crypto transactions and the “comprehensively sanctioned country” the defendant dealt with. Currently, five countries, Russia, Cuba, North Korea, Iran, and Syria, fall under U.S. sanctioned nations.
The defendant was accused of sending more than $10 million in bitcoin (BTC) to a crypto exchange in one sanctioned nation.
Per the strongly worded ruling, the accused created an account with a U.S.-based crypto exchange to buy and sell cryptos such as ether (ETH). The perpetrator then used this account to send thousands of dollars to two accounts at a foreign-based virtual currency exchange. It noted,
“Defendant used these two accounts to transmit over $10 million worth of bitcoin between the United States and Sanctioned Country for the Payments Platform’s customers.”
The case came into the limelight because the accused believed that crypto was “untraceable.” In fact, the defendant “proudly stated the Payments Platform could circumvent U.S. sanctions.”
The Judge wrote,
“[The defendant] faces liability because his transactions caused the virtual currency exchanges—perhaps unwittingly—to violate sanctions.”
OFAC Regulations include cryptos under law
The Office of Foreign Assets Control (OFAC), an arm of the U.S. Treasury Department, released regulations in 2020, which made clear that cryptocurrencies used for transactions to sanctioned nations are no different from fiat transactions to those countries.
The perpetrator has allegedly violated the International Emergency Economic Powers Act (IEEPA) and defrauded the United States. It was clear that the actions also violated regulations put forward by the OFAC.
But it seems that this isn’t the first U.S. case directly related to the use of bitcoin to evade sanctions. In 2019, Ethereum Foundation researcher Virgil Griffith was charged for helping North Korea “launder money and evade sanctions.”
The Judge concluded his nine-page opinion on this still-sealed case by raising two issues,
“Issue One: virtual currency is untraceable? WRONG … Issue Two: sanctions do not apply to virtual currency? WRONG.”
The Australian Dollar is edging higher early Tuesday after Australia’s central bank signaled another rate hike was likely at its June policy meeting. The move also shows traders are shrugging off bearish economic news from China, indicating oversold conditions.
Besides the technical short-covering, the Aussie is getting help from minutes of the Reserve Bank of Australia’s (RBA) last policy meeting, which dropped a heavy hint that another rate rise was coming in June.
June financial futures dipped to fully price in a quarter-point hike to 0.60% on June 7, and have rates reaching 1.35% by August following inflation data for the second quarter.
Aussie traders are now gearing up for Wednesday’s all important wage data figures, which will offer clues on the pace of wage inflation. Traders expect the data to show annual growth picking up to 2.5%. Additionally, jobs data for May on Thursday could show unemployment falling under 4.0% for the first time since the early 1970s.
In the U.S., traders are waiting for the release of April’s retail sales report and others including industrial production. Bearish retail sales numbers could weaken the case for an aggressive Fed. This news would put pressure on the U.S. Dollar, leading to more short-covering in the Australian Dollar.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6829 will signal a resumption of the downtrend. A move through .7266 will change the main trend to up.
The minor trend is also down. A trade through .7053 will change the minor trend to up. This will shift momentum to the upside.
The minor range is .7053 to .6829. Its pivot at .6941 is new support.
The short-term range is .7266 to .6829. Its retracement zone at .7048 to .7999 is the next upside target. This is followed by additional resistance at .7144 to .7218.
Daily Swing Chart Technical Forecast
Trader reaction to .6941 will likely determine the direction of the AUD/USD on Tuesday.
A sustained move over .6941 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the resistance cluster at .7048 – .7053. Sellers could come in on the first test of this area, but if it fails, prices could spike into .7099.
A sustained move under .6941 will signal the return of sellers. This could lead to a near-term test of the main bottom at .6829, followed by long-term bottoms at .6811 and .6777.
Silver prices rise above the $21 level after facing downward pressure last week.
Treasury yields eased as investors wait for hints about Fed monetary policy.
Oil prices sustained upward momentum amid supply concerns about an embargo on Russian oil
Silver prices traded higher on Monday despite rising yields and a stronger dollar. However, the precious metal still has a bearish outlook as prices remain pressured around multi-month lows.
The dollar extended gains to two-decade highs as investors place bets on a stronger dollar. Benchmark yields slightly lowered as investors await economic data. The ten-year yield slid by 3 basis points today.
Gold prices fell sharply as investors develop greater bearish sentiment. A stronger dollar underpins bearish gold prices. Oil prices moved higher on Monday as European diplomats showed optimism regarding an agreement about a potential Russian oil ban, which would reduce the oil supply.
The prospect of the oil embargo offset concerns about demand due to the sustained lockdowns in China.
The Empire State Manufacturing Index came in lower than expected. Investors await this week’s economic data about retail sales for clues about the size of the Fed’s next move.
April housing starts will be reported on May 18th, which will signal how interest rate-sensitive sectors like the housing market are faring in tightening financial conditions.
Economists expect there to be a decline, but activity should remain elevated. Another sector to examine that will indicate how rate hikes are impacting financial conditions is foreign earnings for US companies.
The dollar is strengthening relative to other currencies and is acting as a headwind for economic growth.
Silver prices recovered from last week’s lows and held above the $21 level. However, XAG/USD faces a bearish outlook and will face a downward break of the $21 level before moving lower. The trend indicates downward momentum favoring bearish traders.
Support is seen near the 2019 lows near the $19.60s region. Resistance is seen near the 10-day moving average near the 10-day moving average of 21.82. Short-term momentum turned positive as the fast stochastic had a crossover buy signal.
The medium-term momentum turned negative as the histogram prints negatively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is in negative territory, which reflects the downward trend in price movement.
Rate tightening places downward pressure on rate-sensitive sectors.
Treasury yields eased as investors wait for hints about Fed monetary policy.
Gold prices recovered in volatile trading after hitting multi-week lows as higher yields and a stronger dollar placed downward momentum. The dollar rallies to two-decade highs as investors long the dollar. Benchmark yields pulled back as investors await economic data. The ten-year yield slid by 3 basis points today.
The Empire State Manufacturing Index came in lower than expected. Investors await this week’s economic data about retail sales for clues about the size of the Fed’s next move. April housing starts will be reported on May 18th, which will signal how rate-sensitive sectors are faring in tightening financial conditions.
Economists expect there to be a decline, but activity should remain elevated. Furthermore, the dollar is strengthening relative to other currencies and is acting as a headwind for economic growth for US companies with foreign earnings.
Gold prices fell sharply as bearish sentiment builds among investors for XAU/USD. Gold prices face downward momentum toward the 1,800 level and are headed toward $1780, which was near the low of today’s trading session.
Support is seen near the late January 2022 lows near 1780. Resistance is seen at the former support level near the 200-day moving average of 1,837.18.
Short-term momentum turns positive as the Fast Stochastic generated a crossover buy signal. Prices remain oversold as the fast stochastic prints a reading of 19.82 below the oversold trigger level of 20.
Medium-term momentum turned negative as the MACD generates a crossover sell signal. This occurs as the 12-day moving average minus the 26-day moving average crosses below the 9-day moving average of the MACD line.
The weather is expected to be warmer than usual throughout the South.
The CME Group preliminary readings indicated that open interest went up for natural gas futures.
Natural gas prices rallied in today’s trading session. According to the National Oceanic Atmospheric Administration, the weather is expected to be warmer than normal during the next 6-10 days and 8-14 days throughout most of the South.
Temperatures have been cooler in the Northwest and the Northern part of the US. Inventories rose in the latest report.
The CME Group’s preliminary natural gas readings stated that open interest for natural gas futures increased by 8,000 contracts. prices face upward momentum despite that prices decline as consumption falls.
This scenario comes as a result of warmer and more moderate temperatures across the United States and less heating demand.
On Monday, natural gas prices hovered near the 10-day moving average of 7.84 before edging slightly lower. Prices might be entering a consolidation phase amid rising interest but falling volume in trading. Target resistance is seen near the $8 level.
Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal.
Medium-term momentum has turned negative. The MACD (moving average convergence divergence) generated a crossover sell signal. This situation occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).
The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.
Treasury yields eased as investors await clues about the Fed’s next move.
Oil prices faced upward traction amid supply concerns over the Russian oil embargo.
USD/CAD remained little changed as the dollar continued to strengthen against most major currencies. The dollar moved higher nearing two-decade highs as investors long the dollar. Benchmark yields traded lower as investors await this week’s economic data. The ten-year yield declined by 3 basis points today.
Gold prices whipsawed as investors develop greater bearish sentiment. A stronger dollar supports bearish gold prices.
Oil prices rose as European diplomats showed optimism regarding a potential Russian oil ban, which would reduce the oil supply. The prospect of the oil embargo offset concerns about demand due to the sustained lockdowns in China.
The Empire State Manufacturing Index came in lower than expected. Investors await this week’s economic data about retail sales for clues about the size of the Fed’s next move.
April housing starts will be reported on May 18th, which will signal how interest rate-sensitive sectors like the housing market are faring in tightening financial conditions.
Economists predict that housing market activity will remain elevated despite a decline from the previous month. US companies with foreign earnings will also face a headwind from the dollar strengthening relative to other currencies, which will be evident in their earnings.
The USD/CAD held steady near the 1.289 level, but the pattern indicates that a top may be developing for the currency pair. A break below the 1.289 level will signal further downward pressure, putting the currency pair in the 1.27s region.
Resistance is seen near the 10-day moving average of 1.291. Support is seen near the May 5th low near 1.27.
Short-term momentum is negative as the fast stochastic had a crossover sell signal. Medium-term momentum turns negative as the MACD line might generate a crossover sell signal.
This scenario happens when the MACD line (the 12-day moving average minus the 26-day moving average) crosses the MACD signal line (the 9-day MA of the MACD line). The trajectory of the MACD is in positive territory, which reflects an upward trend in price movement.
Nomura Holdings, Inc is a Japanese financial holding company and a principal member of the Nomura Group. According to a report from the Financial Times, Nomura is launching a new subsidiary focused on institutional client services for bitcoin and other cryptocurrencies.
Reportedly, Nomura plans to have around 100 people working for the subsidiary by the end of 2012. While the current executives will be primarily responsible for running the company, sources close to the firm have revealed that there are plans for extensive outside hiring.
Just last week, the Japanese investment bank began trading cryptocurrency derivative contracts. This strategic move placed the bank on track with competitors such as Goldman Sachs (GS) and JPMorgan (JPM), giving clients a way to access the cryptocurrency market.
Nomura’s current Chief Digital Officer for its wholesale business, Jez Mohideen, will head the new project. That said, for now, it is reported that fifteen current staff members will be transferred to Nomura’s yet-unnamed crypto company.
Crypto Firms Increase Offerings Despite the BTC Fall
After launching over-the-counter cryptocurrency derivatives with bitcoin (BTC) non-deliverable forwards and non-deliverable options for clients in Asia out of Singapore, the bank has yet again accelerated crypto growth.
Seemingly, despite the recent market volatility and loss in market cap, Nomura has continued to make advancements in the space. The firm also recently announced its first bitcoin futures and options trades on the Chicago-based exchange CME.
Reportedly, the trades were made via Cumberland, the crypto arm of trading firm DRW.
Apart from Nomura, Goldman Sachs and JPMorgan are among other top players that have also been developing their crypto-asset offerings lately.
Tesla will be an interesting rebound play in case the situation with coronavirus in China stabilizes.
Ford is trading at just 6 forward P/E, which is attractive for value-oriented traders.
The general market is trying to rebound, which could provide additional support to automotive stocks.
S&P 500 has recently moved away from yearly lows, but many stocks remain under material pressure. The stocks in the automotive industry are not an exception as traders are worried that higher costs and potential slowdown of the world economy would hurt automakers’ profits. That said, some automotive stocks are trading at attractive valuation levels that have not been seen for quite some time.
Tesla stock has recently found itself under significant pressure due to lockdowns in China. Musk’s desire to buy Twitter has also hurt investor sentiment, although the recent news indicated that the fate of the deal remained uncertain.
Meanwhile, analyst estimates have moved higher in recent months. Currently, Tesla is expected to report a profit of $12.32 per share in 2022 and earnings of $15.8 per share in 2023, so the stock is trading at 47 forward P/E.
Such valuation levels are not cheap for an “ordinary” stock, but Tesla is not an ordinary company. At this point, it looks that demand for the stock may increase in the upcoming weeks in case the situation with coronavirus in China stabilizes after the lockdowns.
Ford stock is extremely cheap compared to Tesla. The company is expected to report earnings of $2.18 per share in the next year, so the stock is trading at just 6 forward P/E.
However, it should be noted that shares of legacy automakers have traded at a huge discount to Tesla for years, so the relative cheapness of Ford stock cannot serve as the main catalyst for the bulls.
However, Ford is also cheap on an absolute basis. It is not easy to see a world-class company valued at just six times its future profits nowadays. Analyst estimates have been trending lower in recent months, which partly explains traders’ skepticism, but current levels should still attract value-oriented investors.
JetBlue urges Spirit shareholders to “Vote No” on Frontier transaction.
The company offers to buy Spirit for $30 per share in cash.
The offer represents a 77% premium to Spirit’s latest closing price.
Spirit Airlines Rallies After JetBlue Announces New Tender Offer
Shares of Spirit Airlines gained strong upside momentum after JetBlueannounced that it had launched “an all-cash, fully financed offer to purchase all the outstanding shares of common stock at $30.00 per share” and urged Spirit shareholders to vote against the transaction with Frontier.
Back in February, Frontier announced a definitive merger agreement with Spirit, offering 1.9126 shares of Frontier plus $2.13 in cash for each share of Spirit Airlines.
In April, JetBlue made its own offer, which was rejected by Spirit Airlines’ board. As a result, JetBlue decided to appeal directly to Spirit shareholders.
Not surprisingly, Spirit stock rallied after the new offer was announced. The Frontier offer had a significant stock component, which was bearish for Spirit stock as Frontier stock has been moving lower in recent months. JetBlue offers cash, which could attract Spirit shareholders.
What’s Next For Spirit Airlines Stock?
The new offer from JetBlue implies a huge premium for Spirit shares as JetBlue offers $30 per share in cash compared to Spirit’s previous closing price of $16.98.
The key question is whether JetBlue will be able to receive all regulatory approvals in case Spirit shareholders vote against the Spirit/Frontier transaction in order to take JetBlue offer.
It remains to be seen whether shareholders will choose JetBlue offer due to regulatory uncertainty, so Spirit stock will continue to trade at a material discount to the offer price of $30.00 per share.
Most likely, the upcoming trading sessions will be extremely volatile, and traders should be prepared to react to new information released by all parties of this drama.
Since the April announcement, the Queen gave stablecoins her blessing during the Queen’s Speech at the House of Lords.
Speaking on behalf of the Queen, Prince Charles delivered support for plans to legalize stablecoins as a means of payment.
UK Treasury To Legalize Stablecoins as a Means of Payment
According to a report from the weekend, the UK Treasury plans to legalize stablecoins as a form of payment.
Chancellor Rishi Sunak said it will,
“Ensure the UK financial services industry is always at the forefront of technology and innovation.”
A UK Treasury spokesperson said,
“Legislation to regulate stablecoins, where used as a means of payment, will be part of the Financial Services and Markets Bill, which was announced in the Queen’s speech.”
The news followed a tumultuous week for stablecoins and the crypto market. Stablecoin TerraUSD (UST) saw its dollar peg shatter, with UST falling to a week low of $0.0437 before steadying.
The meltdown left Terra LUNA at close to zero, with $500 billion wiped off the total crypto market cap before support kicked in.
One key difference, however, is government plans to legalize stablecoins fully backed by currency and other liquid asset reserves. These include Tether (USDT) and USD Coin (USDC).
Stablecoin TerraUSD links to Terra LUNA via an algorithm that failed, leading to a collapse in both.
While TerraUSD and Terra LUNA grabbed the headlines last week, Tether also added to the market stress.
On Thursday, Tether fell to a day low of $0.9511 before returning to close to dollar parity. The fall from parity drove fears of another stablecoin collapse before returning to $0.99 levels. Tether saw a similar move on Sunday, falling to a week low of $0.9408 before steadying.
The markets were less concerned with Sunday’s fall, however, which was modest compared with a February 28 current-year low of $0.8679.
While the UK looks to legalize stablecoins as a means of payment, US lawmakers appear divided.
US Treasury Secretary Yellen Calls for More Regulatory Oversight
Amidst the crypto market turmoil of last week, US lawmakers delivered a different message on the crypto front.
US Treasury Secretary Janet Yellen called for crypto regulations while noting that dollar-pegged stablecoins have yet to reach a scale “where they’re financial stability concerns.”
SEC Chair Gary Gensler took the opportunity to lay claim on the crypto market rather than support innovation.
As governments and regulators grapple with the need for regulatory oversight and to support innovation, some are more ahead of the curve than others.
Dubai is one jurisdiction that has taken the lead in supporting innovation in the digital space. Earlier this month, Dubai’s virtual assets regulator became the first to enter the Metaverse with a virtual HQ.
Australian Taxation Office outlines crypto capital gains for tax time 2022.
ATO would be “taking firm action” to deal with taxpayers who try to counterfeit their records.
ATO will also focus on record-keeping, work-related expenses, rental property income, and deductions.
The Australian Taxation Office (ATO) has included crypto capital gains among four key focus areas for this year’s tax time.
Capital gains warning for crypto sellers
The country’s principal revenue collection body announced today that any crypto assets, including non-fungible tokens (NFTs) that are sold or disposed of this financial year, should include a capital gain or loss and be recorded in the tax return.
According to ATO’s assistant commissioner Tim Loh, the tax body targets “problematic areas” where people make mistakes. He noted,
“Crypto is a popular type of asset, and we expect to see more capital gains or capital losses reported in tax returns this year. Remember, you can’t offset your crypto losses against your salary and wages.”
Australia has generally been regarded as a relatively friendly and stable jurisdiction for cryptocurrencies. Last week, bitcoin (BTC) and ether (ETH) ETFs managed by Sydney-based ETF Securities, in conjunction with Switzerland’s 21Shares, started trading on the Cboe Australia exchange.
ATO has indicated that cryptocurrency is a capital gains tax (CGT) asset. This is because of the increased adoption of digital assets in the Asia-Pacific region. The latest Roy Morgan research into Australians’ investments showed that 5% or over 1 million Australians now own at least one cryptocurrency. According to Loh,
“Through our data collection processes, we know that many Aussies are buying, selling, or exchanging digital coins and assets, so it’s important people understand what this means for their tax obligations.”
The capital gain rules also apply to property and shares sold this financial year. Other areas of focus for the tax authority include record-keeping, work-related expenses, rental income, and deductions.
The ATO stressed that it would take “firm action” against taxpayers who deliberately try to falsify records.
Crypto taxation in Australia
The ATO has been clarifying the operation of the tax law on cryptocurrencies. For income tax purposes, the ATO views crypto as an asset held or traded and not at par with fiat currency. The authority has stated that tax implications for crypto holders depend on the purpose for which the crypto is acquired or held.
The taxation body ATO has previously created a special task force to tackle cryptocurrency tax evasion. Also, it collects bulk records from Australian crypto-designated service providers in order to conduct data matching to ensure that holders are paying taxes appropriately.
“Tomorrow, 32 central banks and 12 financial authorities (44 countries) will meet in El Salvador to discuss financial inclusion, digital economy, banking the unbanked, the #Bitcoin rollout, and its benefits in our country.”
The President then went on to list the attendees, including central banks across Latin America, Asia, and Africa.
Central Bank of Eswatini Ministry of Finance of Eswatini Central Bank of Jordan Central Bank of The Gambia Comisión Nacional de Bancos y Seguros de Honduras Direction Générale du Trésor, Ministère des Finances et du Budget, Madagascar Maldives Monetary Authority
Last month, Central African Republic lawmakers voted in favor of legalizing crypto and considering bitcoin as legal tender.
The number of nations attending will draw plenty of interest, particularly with agencies such as the IMF.
IMF Likely to Sound Alarm Bell Over 44 Nation Bitcoin Gathering
In January, the IMF called on El Salvador to remove bitcoin as legal tender. The IMF issued a press release warning of the risks associated with the use of Bitcoin on financial stability, financial integrity, consumer protection, and fiscal contingent liabilities.”
There were also concerns over the issuance of Bitcoin-backed bonds.
In February, Fitch Ratings downgraded El Salvador’s Long-Term Foreign Currency Issuer Default Rating (IDR) from B- to CCC.
Fitch Ratings noted that El Salvador has been in discussions with the IMF for a $1.3 billion three-year program. With the IMF calling for El Salvador to remove bitcoin as legal tender, however, the prospects of a $1.3m loan remained slim, supporting the Fitch downgrade. The $1.3 billion is seen as a lifeline to meet short-term debt maturities totaling $1.3 billion in August-October 2022.
There may be concerns over today’s gathering. The risk of bitcoin positions or even bitcoin as legal tender, to the respective economies, would be significant.
President Bukele seems undeterred by the IMF or the latest crypto market setback.
Last week, Bukele announced the purchase of an additional 500 coins with an average USD price of $30,744.
El Salvador just bought the dip! 🇸🇻
500 coins at an average USD price of ~$30,744 🥳#Bitcoin
Binance had delisted Bitcoin (BTC)-margined LUNA perpetual contracts on Thursday.
CZ had earlier mentioned that he was “very disappointed” with how the Terra team handled the situation.
A couple of days ago, Binance CEO Changpeng Zhao (CZ) issued a warning on Twitter to “respect the market, with a level of caution,” as the LUNA and UST saga continued to shake up the market.
Even though CZ acted as a critic, over the last week, amid the LUNA and UST crisis, rumors were floating on Twitter that crypto exchange Binance was one of the big investors in the Terra LUNA ecosystem.
CZ clears name from LUNA investment
To clear Binance’s name from the Terra conundrum, Binance CEO CZ stepped forward to address the rumors. He wrote on his Twitter account: “First, I need to address falsehoods circulating in crypto Twitter. Binance did not participate in the 2nd round of Luna’s fundraising, nor did we acquire any UST. Binance Labs invested $3m USD in Terra (the layer 0 blockchain) in 2018. UST came much later after our initial investment.”
CZ also added that Binance Labs had made investments in a number of crypto projects over the last four years. While some of those projects have fallen by the wayside, a few have been highly successful. “That’s how investments work,” CZ said.
4/ Binance Labs invested in hundreds of projects over the last 4 years, including exchange “competitors” and many “competing” blockchains. A few of them have fallen by the wayside, but a few have been extremely successful. That’s how investments work.
On Thursday, Binance posted an update announcing that it was delisting COIN-margined LUNA perpetual contracts. Binance Futures uses Bitcoin (BTC) as the base asset for its perpetual contracts, which means that customers need to use Bitcoin to fund the margin on their LUNA trades.
The exchange also reduced the available leverage on its USDT-margined LUNA perpetual, with the maximum set at 8x. Soon after LUNA’s freefall began, the exchange halted LUNA and UST withdrawals in response to UST losing its peg to the dollar.
Commenting about the market fall, CZ cautioned investors by saying:
“We are in a new market, with many innovations. Algo stablecoins are one of them. When they are hot, they are all the rage. When they drop, it can be a vicious circle.”
The collapse of the Terra ecosystem was one of the most noteworthy falls as the Terra tokens fell to dust. LUNA made its way from the top five cryptocurrencies by market cap down to 207 in market cap, as the coin struggled to make its way back up.
Amid the ongoing drama, CZ added that he was hopeful that the project teams “can rise from the ashes and rebuild in a proper and sensible way.”
Many asked me about the markets today. We need to respect the market, with a level of caution too. It goes up and down in cycles. And especially the fact that it doesn’t always make sense. 1/4
The CEO of a crypto and forex trading platform is charged with a fraudulent scheme.
Eddy Alexandre promised 5% weekly returns for its investors.
The case is being handled by the Office’s Securities and Commodities Fraud Task Force.
Eddy Alexandre, the CEO of cryptocurrency trading platform EminiFX, has been arrested by the FBI on a charge of commodities and wire fraud.
According to an official announcement from the US Department of Justice, Alexandre ran a fraudulent crypto investment and trading platform and managed to solicit $59 million in investments from hundreds of customers, between September 2021 and May 2022.
False promises and luxury items
Alexandre reportedly made false promises offering high return potential and specifically claimed that the platform’s users would become millionaires within a few years if they invested $100,000.
Commenting on the case, US Attorney Damian Williams said that “in reality, no such technology existed, as Alexandre is alleged to have invested very little of their money – most of which he lost – and transferred most of it to his own personal accounts to pay for luxury items for himself.”
FBI Assistant Director-in-Charge Michael J. Driscoll said:
“As alleged, Mr. Alexandre solicited millions of dollars from unwitting investors to whom he ‘guaranteed’ weekly returns of 5% through his trading platform using a new technology he refused to disclose. As with many greedy actors who have preceded him, he then used significant portions of the investor funds he solicited to buy expensive luxuries for himself.”
Alexandre reportedly transferred at least $14.7 million of investors’ funds to his personal bank accounts, instead of investing it as promised. The announcement further revealed that he spent $155,000 in investor funds to buy a BMW car for himself and $13,000 on car payments.
Crypto-related crime continues to proliferate
As reported earlier today, some users of the Web3 crypto wallet MetaMask have fallen victim to a phishing attack, with a number of popular crypto websites being affected. Those include CoinGecko, DeFiPrime, and DexTools, among others.
🚨 We’ve received reports of phishing popups via a 3rd party integration and are currently investigating.
Please be careful not to confirm any transactions that pop up on the website.
Last week, City of London police were investigating “crypto muggings” in London, where victims had reportedly lost thousands of pounds in cryptocurrency.
Criminals were targeting people’s crypto investments handled on smartphones by either luring them from the owners or applying physical force to gain access to accounts.
In March, the US Securities and Exchange Commission charged siblings John and JonAtina Barksdale in a $124 million fraud scheme involving a digital token called “Ormeus Coin.” The official press release read:
“[…] the defendants falsely claimed that Ormeus Coin was supported by one of the largest crypto mining operations in the world, even though they abandoned their mining operations in 2019 after generating less than $3 million in total mining revenue. As alleged, in many of these investor communications, the defendants falsely stated that Ormeus Coin had a $250 million crypto mining operation and was producing $5.4 million to $8 million per month in mining revenues.”
It is a week for the crypto market to forget, with TerraUSD (UST) sinking Terra LUNA and the broader market.
The UST de-pegging from the dollar led LUNA out of the top ten to #206 on CoinMarketCap.
LUNA’s meltdown wiped out $700 billion from the market, causing regulatory ire.
Stablecoins and Terraform Labs became the center of a crypto market storm in the week. TerraUSD (UST) saw the dollar peg algorithm fail epically, leaving TerraUSD at a week low of $0.0437 before partially recovering.
The UST meltdown had far-reaching implications. Terra LUNA imploded, tumbling to close to zero and out of the crypto top 200 by market cap.
After the UST catastrophe on Monday, Tether (USDT) added to the market angst on Thursday, with a fall from parity. USDT fell to a week low of $0.9511. Fears of another stablecoin collapse sent the markets into another tailspin before a recovery to $0.99 levels restored market order.
The events of the week saw the correlation between the bitcoin (BTC) and the NASDAQ 100 weaken for all the wrong reasons.
A chaotic week saw bitcoin slide to a week low of $25,836 before finding support to bounce back to $30,000 levels.
News of Bitcoin Whales jumping ship, however, raises concerns over the near-term outlook for BTC and the broader market.
On Friday, FX Empirereported the news of Bitcoin whales jumping ship, with a slide across the US equity markets adding pressure on whales to reduce risk and cash out to meet possible margin calls.
Notably, the current bearish trend started back in November, with BTC sliding from an ATH of $68,979 to this week’s current week low of $25,836.
Market angst over Fed monetary policy and the economic outlook had hit the crypto market head of this week’s capitulation.
Near-term, a move through the 50-day EMA ($31,460) and the 100-day EMA ($33,857) would restore some confidence.
A renewed threat of a regulatory overhaul of the crypto market could test investor appetite, however.
Terra Lab Returns the Risk of a Crypto Market Regulatory Overhaul
In response to the UST stablecoin and the demise of LUNA, lawmakers stepped forward, calling for action.
On Wednesday, the UST and LUNA collapse drew the attention of US Treasury Secretary Janet Yellen. Treasury Secretary Yellen highlighted the risks of stablecoins to financial stability and the need for a framework.
Yellen followed Wednesday’s comments on Capitol Hill with further calls for crypto regulations while noting that dollar-pegged stablecoins have yet to reach a scale “where they’re financial stability concerns.”
The ex-Fed Chair was not alone, with SEC Chair Gary Gensler taking the opportunity to target digital assets. Gensler staked claim on digital assets, saying that,
“Most crypto tokens involve a group of entrepreneurs raising money from the public in anticipation of profits – the hallmark of an investment contract or a security under our jurisdiction. Most crypto tokens are investment contracts under the Supreme Court’s Howey Test.”
Bitcoin Fear & Greed Index Sees Lowest Level Since 2020
In the week ending May 15, BTC looks set to finish with a 14% loss, following on from last week’s 11.5% decline. BTC is on target for a seventh consecutive weekly loss, its longest losing streak since 2018. In May 2018, BTC saw red for six weeks out of seven.
The Fear & Greed Index continued to reflect investor sentiment, with the Index falling from 18/100 to a Saturday week low of 9/100. It was the lowest level since March 14, 2020, when the Index stood at 8/100.
A fall deeper into the “Extreme Fear” zone suggests more trouble ahead.
On Sunday, the Index climbed to 10/100, though this may provide little comfort to investors looking for an entry price.
Things were no better for the rest of the crypto top ten.
The Broader Market Tracks Bitcoin into the Red
In the week ending May 15, Terra (LUNA) is heading for a 99% slump to $0.00032 levels.
At the time of writing, ADA (-29.9%), AVAX (-37.6%), SOL (-33.6%), and XRP (-26.1%) are heading for heavy losses.
BNB (-18.4%) and ETH (-20.2%) look set for relatively modest losses, however.
The total crypto market cap slumped from a start of the week $1,554 billion to a week low of $1,082 billion before partially recovering to $1,262 billion.
While TerraUSD and Terra LUNA grabbed the crypto headlines, there were other news worth events.
News Highlights of the Week
Nomura Bank announced its first bitcoin derivatives offering.
Aussie ETFs went live amidst crypto market turmoil.
In a tumultuous week for cryptos, the TerraUSD peg with the dollar shattered and Terra LUNA collapsed.
Mid-week, the message was of hope, with Terra Lab CEO and co-founder Do Kwon talking of an imminent fix.
TerraUSD stabilized at $0.1 levels, while LUNA floundered at $0.0001 levels after delistings by major exchanges.
Terra Lab CEO and Co-Founder Do Kwon went dark on Twitter following the collapse of stablecoin TerraUSD (UST). This week, UST de-pegged from the dollar in catastrophic style, with UST tumbling to a week low of $0.0437.
The impact on the broader crypto market was significant, with as much as $722 billion wiped out before a partial recovery ensued. On Thursday, the total crypto market cap sunk to $1,082 billion, its lowest level since February 2021.
While the broader crypto market took a hit, Terra LUNA was the biggest victim, falling by close to 100% to $0.0001 levels.
Hopes of a re-peg lingered mid-week, following messages from Terra Lab CEO and co-founder Do Kwon.
Terra Lab CEO and Co-Founder Do Kown Returns to Twitter
Following a series of tweets on Wednesday, Do Kwon went Twitter dark until this morning.
The Terra Lab CEO started a series of tweets by saying,
“I’ve spent the last few days on the phone calling Terra community members – builders, community members, employees, friends, and family, that have been devastated by UST depegging.”
“I am heartbroken about the pain my invention has brought on all of you.”
Do Kwon followed the initial tweet with five others, discussing proposals on possible options to move forward and his views on decentralized economies.
He also stated that,
“Neither I nor any institutions that I am affiliated with profited in any way from this incident. I sold no luna nor ust during the crisis.”
3/ Neither I nor any institutions that I am affiliated with profited in any way from this incident. I sold no luna nor ust during the crisis.
“Even if the peg were to eventually restore after the last marginal buyers and sellers have capitulated, the holders of Luna have so severely been liquidated and diluted that we will lack the ecosystem to build back up from the ashes.”
He went on to say,
“While a decentralized economy does not need decentralized money, UST has lost too much trust with its users to play the role.”
Do Kwon then highlighted the reasons for preserving the Terra ecosystem and its community before proposing a way forward for the community to form a consensus.
The proposals included,
A 40% allocation (400 million) of one billion tokens to Luna holders before the de-pegging event.
400 million tokens (40%) to UST holders pro-rata at the time of the new network upgrade.
100 million (10%) to Luna holders at the final moment of the chain halt.
100 million (10%) to the Community Pool to fund future development.
The tweets followed news of a global asset management company entering talks to aid Terra Lab in restoring the UST peg.
Swiss Asset Management Giant GAM Holding Refutes Terra Lab Talks
On Thursday rumors hit the wires of Swiss Asset Management giant GAM entering into talks with Terraform Labs in a $3 billion UST rescue bid.
Media outlets reported GAM announcing that it could invest between $2-3 billion to burn excess supply of UST to help Terra restore the UST’s peg to the dollar.
The story turned out to be false, however. On Friday, GAM Holding AG announced that it is not in negotiations with Terraform Labs to support the Luna stablecoin.
The short statement stated,
“A press release purporting to come from GAM Holding was issued at 23:00 UK time on 12 May. There is no truth in the story and GAM did not issue a press release. GAM has strict controls on the dissemination of press releases, and we are investigating the source of this story and how it became to be published.”
The refute removed any hope of a quick fix and a LUNA and UST recovery.
At the time of writing, LUNA was up 63.6% to $0.0001949, with TerraUSD up 26.8% to $0.1625.
On May 14, CoinGecko posted a notice reporting that a malicious ad script had caused the attack from crypto ad network Coinzilla. It added that it has been disabled and warned users not to connect their MetaMask wallets to the data analytics portal.
A phishing attack is a targeted attack on a particular group, in this case, crypto wallet users. Some pop-ups disseminated malicious links to popular NFT projects such as the Bored Ape Yacht Club. The dodgy domain had been taken down at the time of writing.
Update: The situation is caused by a malicious ad script by Coinzilla, a crypto ad network – we have disabled it now but there may be some delay due to CDN caching. We are monitoring the situation further. Do stay on alert and don't connect your Metamask on CoinGecko. https://t.co/NY0ppKecIG
Etherscan, a popular Ethereum blockchain tracker, warned that “we’ve received reports of phishing popups via a 3rd party integration and are currently investigating. Please be careful not to confirm any transactions that pop up on the website.”
Another crypto-based app website called DexTools was also compromised. “We are disabling all ads until the situation is clarified by @adsbycoinzilla,” it stated before warning, “please be aware and don’t sign suspicious requests at your wallet.”
Crypto Phishing Attacks on The Rise
Dodgy advertising scripts have been used before to target cryptocurrency users. In November, a phishing attack that used Google Ads was identified as it attempted to steal credentials or trick users into logging into the attacker’s wallet so they would become the new recipient of any transactions.
Google and Facebook (now Meta) have both been manipulated by malicious actors to display scam crypto advertising that lures users into divulging personal information or enabling wallet access.