Riding The Wave News Summary #59
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Tweets
New York judge freezes assets of Three Arrows Capital as crypto firm’s founders remain underground
Bitcoin Briefly Dips Below $19K; Ether Drops Sharply After US Inflation Report
Bitcoin not a currency? South Africa to regulate crypto as financial asset
Ethereum price risks ‘bear flag’ breakdown, 20% drop against Bitcoin
Tweets
New York judge freezes assets of Three Arrows Capital as crypto firm’s founders remain underground
A federal judge in a New York bankruptcy court has frozen the remaining assets of crypto hedge fund Three Arrows Capital following the firm’s rapid fall from prominence.
The fund, founded nearly a decade ago, managed $10 billion in assets just a few months ago. Now, its two co-founders are in hiding from angry creditors, who are trying to recoup some of their losses. Prior to the bankruptcy filing, a court in the British Virgin Islands ordered the beleaguered fund to liquidate in order to pay back its debts.
Judge Martin Glenn of the Southern District of New York granted the emergency motion on Tuesday to freeze Three Arrows’ assets. CNBC joined a court hearing, which covered next steps in the bankruptcy process.
The chief concern is that Three Arrows, also known as 3AC, and its leadership team might be siphoning funds ahead of the formal liquidation. Coindesk reported that Zhu is looking to sell his $35 million Singapore property, and there are reports of at least one other digital asset transfer of a non-fungible token held by the fund.
But after a nearly month-long hiatus from Twitter, Zhu broke his silence on Twitter early Tuesday, writing that the firm’s efforts to cooperate with creditors had been met with “baiting.”
From his verified account, Zhu shared screengrabs of emails sent by his lawyer to counsel representing liquidators. In those messages, the attorney wrote that the families of the co-founders “have received threats of physical violence.” He also said Zhu and Davies have been “working under a lot of time pressure,” noting that they “had to field queries from the Monetary Authority of Singapore in the last week.”
In the email, Daniel, their attorney, said he attached a spreadsheet with details of the company’s assets and said they would be providing additional information about the firm’s assets “on a rolling basis.”
Nic Carter of Castle Island Ventures, which invests in blockchain-based companies, said the process could ultimately take years.
Carter said the case is particularly complex because it involves entities in Dubai, Singapore and other offshore locations.
Bitcoin Briefly Dips Below $19K; Ether Drops Sharply After US Inflation Report
Bitcoin briefly slipped below $19,000 on major crypto exchanges following the release of the U.S. consumer price index (CPI), which came in higher than economists' estimates.
Bitcoin fell to as low as $18,912 before recovering.
A sell-off in risky assets followed the release. In the past hour, ether (ETH) lost 4.4%, with Cardano’s ADA, Solana’s SOL and dogecoin mirroring the losses. Most of the 100 largest cryptocurrencies by market capitalization fell at least 4%, CoinGecko data shows.
I would be surprised if we didn’t see a sharper sell-off in the near future due to these high CPI numbers (assuming we stay coupled with traditional markets).
Bitcoin not a currency? South Africa to regulate crypto as financial asset
The South African Reserve Bank is set to introduce regulations next year that will see cryptocurrencies classed and treated as financial assets to balance investor protection and innovation.
Cryptocurrency use in South Africa is in a healthy space, with around 13% of the population estimated to own some form of cryptocurrency, according to research from global exchange Luno. With more than six million people in the country having cryptocurrency exposure, regulation of the space has long been a talking point.
South African Reserve Bank deputy governor Kuben Chetty has now confirmed that new legislation will be introduced in the next 12 months, speaking in an online series hosted by local investment firm PSG on Tuesday. This will see cryptocurrencies fall under the scope of the Financial Intelligence Centre Act (FICA).
This is significant, as it will allow the sector to be monitored for money laundering, tax evasion and terrorism financing, which has been a heavily debated byproduct of the decentralized nature of cryptocurrencies and blockchains.
Firstly, it will declare cryptocurrencies as a financial product which allows their listing as a schedule under the Financial Intelligence Centre act.
Following that, a regulatory framework will be developed for exchanges which will include certain Know Your Customer (KYC) requirements as well as the need to meet tax and exchange control laws. Exchanges will also be expected to issue a ‘health warning’ to highlight the risk of losing money.
I would agree that many cryptocurrencies aren’t really currencies so much as businesses that provide a service where tokens are used similarly to how games use in-game currency & companies use store credit. With how new the space is, this distinction is only starting to be made via regulation.
Ethereum price risks ‘bear flag’ breakdown, 20% drop against Bitcoin
The ETH/BTC chart has been forming a bear flag since early June 2022 on the three-day timeframe.
In detail, bear flags are considered bearish continuation patterns that form as the price consolidates higher inside a range defined by two ascending parallel trendlines after a sharp decline. They resolve after the price breaks below the lower trendline, i.e., in the direction of its previous downtrend.
As a rule of technical analysis, a bear flag’s downside target comes to be at a length equal to the size of the previous downside move. Lately, ETH/BTC has been eyeing a similar breakdown, with its profit target sitting around 0.0439, down almost 20% from the price on July 13.
Nonetheless, bear flags have an average success rate of around 67% when it comes to meeting its profit targets, according to Samurai Trading Academy’s study. Additionally, veteran analyst Tom Bulkowski sees the bear flag meeting its target only 46 times out of 100 attempts.
Pentoshi suggests that ETH/BTC could dip toward an ascending trendline that has been serving as its support since September 2019 — the level comes near 0.036, down 30% from the price on July 13.
As I haven’t seen any signs of a trend reversal, I’m prepared for Bitcoin and crypto, in general, to continue to drop unless we see a decoupling from traditional markets.
Disclaimer: The information in this Newsletter is not financial, legal, or tax advice. I only trade on Etoro; if you are reached out to by people requesting you join a group or provide money, it is not me. My only public social media accounts are this Substack page, my Youtube page, my Twitter page, and my Etoro page; any others you see online are not me.