Cumberland Fires Back at SEC in Market Maker Crackdown

The Breakdown First Five - Friday, October 11, 2024

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. Sun’s New Title

His Excellency Justin Sun is now the Prime Minister of Liberland. If you think that sounds made up, most of the world agrees with you. The separatist Balkan micronation is not recognized by any supranational organization nor any of its neighbors. Sun compared Liberland to Vatican City, as “the heart of the libertarian movement.” A Liberland spokesperson claimed their blockchain based election process was “entirely algorithmic, providing transparency.”

4. “Institutions” Selling

The Coinbase premium has pushed deeply negative, suggesting heavy and persistent institutional selling. Bitcoin hit a $50 discount on Coinbase, the widest gap in several months, suggesting someone is getting out of their position in a very sloppy manner. Many suggest the seller is the largest institution of them all, the US Government. They were cleared to sell $4.4B in seized Bitcoin earlier this week. We won’t know for sure due to new custody arrangements. 

3. TD Bank’s Record AML Fine

TD Bank has agreed to pay a record $3B fine after facilitating money laundering for six years. The DOJ alleges the bank allowed at least three major criminal networks to launder over $670M through the bank. Five employees were alleged to be in on the scheme, opening accounts under false credentials. 92% of transaction volume was completely unmonitored. No executives face criminal charges and there is zero suggestion the bank will be shut down. 

2. Hot CPI, Cold Bitcoin

September's CPI print came in above expectations, tamping down hopes of aggressive rate cuts to end the year. Headline CPI was 2.4% with Core CPI at a stubborn 3.3%. Small upticks across numerous categories spoke to a lack of further progress, rather than reinflation. Still, Fed President Raphael Bostick said he would be open to a rate pause in November. Bitcoin hated the print and the implication that rate cuts would be delivered much more cautiously.

1. Cumberland’s Middle Finger

The SEC continues its crackdown on crypto market makers, suing Cumberland DRW. Cumberland is one of the largest in the space, outsizing Jump, Wintermute and Jane Street. The firm posted a terse response to Gensler and his goons, explaining that they had not only attempted to “come in and register”, but actually obtained a broker-dealer license. They later found out the SEC still considered their operations illegal.