Binance Too Big to Jail?

Plus BTC ETF odds improve

Author

Nathaniel Whittemore
August 03, 2023

The Breakdown First Five - Thursday, August 3 2023

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

5. Bitcoin ETF Odds Improve

Bloomberg Analysts have upped their projection and are now saying there is a 65% chance that a Bitcoin ETF is approved. Recent improvement comes from Gensler’s soft talking (‘I’m just one of five commissioners’) and the SEC asking Coinbase to delist everything but Bitcoin. The biggest remaining negative is that Gensler still thinks we’re all frauds and hucksters in this industry, meaning Coinbase surveillance may not be enough to satisfy manipulation concerns.

4. Forget It, It’s Chinatown

Despite the ban on trading, China still represents 20% of volume on Binance. The WSJ claims to have seen “mission control” screenshots showing $90B in monthly volume in May attributed to China across 900,000 active users. Also claims 100,000 Chinese customers are labeled as “politically exposed people”; government officials and associates. These types of people are monitored for money laundering risk across the banking system. The plot thickens.

3. Abracadabra, It’s Systemic Risk!

Lending protocol Abracabra is holding a vote to decide how to deal with toxic CRV loans. The protocol has $18M lent to curve founder Michael Egorov at 18% interest, but is voting to bump that up to 200% and begin liquidating to reduce their exposure to CRV. With Frax paid down, it seems that Aave might be left holding the bag on bad loans. Meanwhile more whales took OTC deals with Egorov on handshake deals not to sell their discounted CRV. Future of finance.

2. HK Opens with Hashkey

Hashkey has obtained the first license to offer retail trading in Hong Kong. The firm had opted into voluntary licensing prior to the formalization of regulations in June. No news yet on which assets will be offered, but the list is short under the HK regulations. Hashkey and OSL were the only exchanges in the voluntary licensing system, but major exchanges including Huobi, Gate.io and OKX are also seeking registration.

1. Binance Too Big To Jail

Semafor reporting claimed the DOJ is considering bringing fraud charges against Binance, but is worried they might trigger a bank run and harm investors. Prosecutors are considering settling for a fine or a deferred prosecution agreement. Essentially a slap on the wrist, but in line with the treatment other large firms get. DOJ rumblings have been ongoing for months, but this is the first time reporting has referenced concerns of the fallout for the average customer.

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Thanks for reading -NLW