3rd week of 2023 has arrived, and legend has it that 3 is the magic number. Glancing at the week that went by, the Pen team has reluctantly searched for where the magic lies. Is it the unfolding of FTX lies and moving closer to SBF not getting off the hook that easily? Is it that Jamie Dimon is not as cool as he thinks he is? Or is it that Elon is not the savior everyone thought he is? It could be that inflation is falling in certain parts of the world, it could be that crypto is seeing a slight rally again, or that world debt is magically disappearing. All of this and much more on this week’s Weekly Pen Drop. Have a good read.
THE "RUSSIARANI" AFFAIR
Iran and Russia are collaborating on issuing a new stablecoin backed by gold, which would be used for trade between the two countries as a way to bypass US sanctions. The stablecoin would be pegged to the price of gold and used for transactions in industries such as oil and gas. The details and timing of the stablecoin's launch are currently unclear, but one thing is clear...It won't be a stable launch.
UK INFLATION ROUND 2 DROP
The UK inflation rate has dipped for the second straight month, hitting 1.5%. The decrease in the inflation rate is driven by recreation and culture goods, transport, food, and non-alcoholic beverages. The Bank of England's target for inflation is 2%, and this decline in the inflation rate eases pressure on the central bank to raise interest rates. The decline in the inflation rate could be temporary, and the Bank of England is closely monitoring the inflation data and will adjust its policies as appropriate to achieve its inflation target.
Binance is planning to allow its institutional clients to use their cryptocurrency holdings as collateral for loans even if the assets are held off-exchange. This service aims to attract more institutional clients to Binance and to provide them with more flexibility in managing their assets.
READY OR NOT HERE THEY COME
Digital currencies are becoming more widely adopted by the banking system with Central banks exploring the use of digital currencies and some have begun testing their own versions. Commercial banks are also exploring the use of digital currencies in their operations and experimenting with blockchain technology to improve their services. Digital currencies can increase financial inclusion and reduce costs associated with traditional banking systems. However, there are also concerns about security, regulatory challenges, and privacy issues.
3AC FOUNDERS SEEKING REDEMPTION
Three Arrows Capital plans to launch a new hybrid crypto exchange with features such as high-speed trading and deep liquidity. They raised $25 million in funding for the development and launch. The launch date is not announced yet, but it is expected to be a game-changer in the crypto industry.
RAISE THE ROOF
The US Treasury Department has warned that the country could default on its debt if Congress does not raise the debt ceiling. If the debt ceiling is not raised, the Treasury will not be able to borrow more money to pay its bills and will default on its debt, which could have severe consequences for the US and the global economy. The Treasury Secretary has urged Congress to act quickly to avoid this outcome.
PETER THIEL HEDGED OUT
Peter Thiel's investment fund, Founders Fund, reportedly sold the majority of its Bitcoin holdings before the recent market crash, having accumulated the cryptocurrency over 8 years, they are said to have made hundreds of millions of dollars from the sale. The market crash has affected many other investors in cryptocurrency, with the price of Bitcoin dropping by around 30% in the past month.
The Department of Justice (DOJ) has taken action against a cryptocurrency exchange called Bitzlato which reportedly kept a low profile but had not gone entirely unnoticed. The exchange may have been involved in illegal activities and may not have been registered with the Financial Crimes Enforcement Network (FinCEN) and did not implement adequate anti-money laundering controls.
Coinbase has confirmed that it is halting its operations in Japan due to the "challenging" regulatory environment. The company had previously obtained a license from the Japanese Financial Services Agency (FSA) in 2017, but it has been under scrutiny by the regulator and was asked to improve its internal controls and anti-money laundering procedures. Other cryptocurrency exchanges have also faced similar issues and Japan's strict regulations have been a hurdle for many players in the crypto space.
CONGRESSIONAL CASH GRAB
Over a third of the members of the U.S Congress have received campaign contributions from the bosses of crypto exchanges, specifically from the bosses of FTX. This raises questions about the ability of Congress to regulate the crypto industry objectively and the transparency of campaign contributions from the crypto industry.
THE ACT OF MAGIC
The IMF's Second-in-command has stated that the world has partly inflated its debt away, low-interest rates and quantitative easing measures have led to an increase in debt levels and it is important for countries to address underlying structural issues and structural reforms are needed along with the monetary policy.
FTX has reported a hack of $415 million worth of crypto assets. The company has reassured customers that they will be reimbursed for any losses and is cooperating with the relevant authorities to investigate the incident and improve security measures. This incident highlights the need for robust security measures for cryptocurrency exchanges.
A report by Alameda Research reveals a significant business relationship between the firm and Genesis Global Trading. Alameda Research has been buying large amounts of Bitcoin from Genesis and lending it out via its own platform, becoming a major market maker for Bitcoin and providing liquidity to the market, emphasizing the growing institutional interest in the cryptocurrency market and the role of market makers.
JAMIE DIMON NOT FTW
JPMorgan Chase's board of directors has decided to stop giving special awards to the bank's CEO, Jamie Dimon. The bank was hit with significant fines and penalties related to various regulatory issues. Dimon will still be eligible for annual performance-based bonuses, but special awards that had been given to him in the past will be eliminated. The decision is seen as a response to calls for greater accountability and transparency in executive compensation and follows similar actions by other large corporations.
Federal Reserve Vice Chairman Richard Clarida stated that the recent decline in the fight against inflation is a notable improvement, driven by transitory factors such as the decline in energy prices. The Fed will monitor the inflation data and adjust its policies to achieve its inflation and employment goals and is prepared to adjust its asset purchase program if necessary.
Elon Musk sold a large number of shares before the company acknowledged weakness in its business. Musk sold shares worth $272 million in the days leading up to the company's announcement of weak Q4 deliveries. The sale represents a significant percentage of his total holdings in the company, raising questions about transparency and the reasons for the sale.
Till We Yield Again