by Samuel Mbaki | Jun 6, 2023 | Markets
Key Points
- The crypto market has crashed following a high-value civil lawsuit by the U.S. SEC against Binance.US and CEO Changpeng Zhao.
- Binance has seen $700M withdrawals happen in the time, while Coinbase’s stocks have fallen by over 10%
- The total crypto market cap has fallen 3.6% to $1.09T in the past 24 hours.
A crypto crash occurs: Binance withdrawals top $700M, Coinbase stock falls 10%, total marketcap falls 3.6%
The Binance lawsuit has triggered a crypto crash, significantly decreasing major cryptos prices. At the moment of writing, Coinbase Stocks were down by 10%, while Binance had suffered a $700M+ in outflows. The total market cap of the crypto market had also fallen by a notable 3.6%
The U.S. SEC has sued Binance.US and its founder Changpeng Zhao under allegations that it operates as an unregistered securities exchange in the country. The lawsuit also outlines that Binance had been aware of the laws it was breaking but completely disregarded the authorities and carried ahead with the operations, citing a quote by its compliance officer in 2018 that they are knowingly running an unregulated securities exchange.
The markets reacted wildly to this information, with Binance international branch seeing outflows of $700M+ in 24 hours. Conversely, Binance.US also saw an uptick in withdrawals, recording $230M+ in 24 hours.
The complaint by the SEC argues that Binance’s BNB token, Solana (SOL), Cardano (ADA), Polygon (MATIC), Coti (COTI) and Algorand blockchains (ALGO), Filecoin network (FIL), Cosmos hub (ATOM), Sandbox platform (SAND), Axie infinity (AXS) and Decentraland (MANA) are securities.
As such, their values plummeted as the market digested the news. Metaverse coins SAND and MANA had the most significant declines, with SAND collapsing by 13% to $0.52 and MANA following closely with an 11.6% decline to $0.45. Keep watching Fintech Express to get updates on the next crypto crash and other Fintech-related developments.
by Samuel Mbaki | Jun 5, 2023 | Regulation
Key Points
- CZ, Binance International CEO has expressed dissatisfaction with the U.S. SEC after the U.S. branch of the exchange was served earlier today
- The SEC has filed a civil lawsuit against the exchange claiming that the exchange has been breaking security laws in the nation
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Binance CEO Changpeng Zhao (CZ) calls SEC out
Binance CEO Changpeng Zhao (CZ) has expressed concern with the U.S. SEC after it sued the U.S. installment of the exchange. This branch has been operating away from the international one offering lesser crypto assets to comply with the U.S. regulations.
However, the U.S. SEC seems to disagree with how its run. It has accused Binance US of providing trading services for securities such as BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI.
It has also also accused Binance of providing coin-earning programs BNB Vault and Simple Earn, and staking investment plan; in addition, the SEC accused Binance of intentionally evading US supervision. CZ has commented on the developments saying that these are acts of attack against crypto considering that the SEC has been serving other crypto exchanges like Kraken and Coinbase in arguably unreasonable way, “regulation by enforcement.”
Cardano founder Charles Hoskinson has commented on the matter talking about the SEC heading operation Chokepoint 2.0 which is meant to smother crypto and lead to the adoption of a state controlled CBDC. In his words, he said
“With respect to Binance, I’m reading through the SEC complaint. It’s over 130 pages, but seems like the next in a series of steps to implement chokepoint 2.0 in the United States. The end goal is a agenda based CBDC partnered with a handful of massive banks and end-to-end control over every aspect of your financial life.”
He added that the ongoing crypto attacks calls for the removal of officials who think investors do not have a right to dictate what happens with their wallets dubbing it “authoritarianism” that needs to be put to an end.
“A regulatory event is where you have a debate about compliance with a law or guidance. This event seems to be a political philosophical disagreement with the very existence of cryptocurrencies and what they represent. An unelected group of people have decided that concepts like self-sovereign identity, owning your wallet, and the freedom to control your economic agency should be removed from the masses and given to the “enlightened” few.”
Crypto industry preparing to fight back?
A highly anticipated ruling on the XRP vs SEC is set to be issued in a few months. The industry hopes for a win which could mean an easier time with SEC and the start of a defence against its unfavorable enforcements. Next on, Coinbase has started a legal process with the SEC after the authority served them saying they have been breaking securities laws in the U.S.CEO, Brian Armstrong has said that he does not believe they are in the wrong and the team will defend itself in court.
When asked about the possibility of the CEXes teaming up to fight back, CZ has said that its not arranged yet. However, that doesn’t mean it can’t happen.
Keep watching Fintech Express for updates on this story as its still developing.
by Samuel Mbaki | Jun 5, 2023 | Learn, Blockchain
- A blockchain node is a device that participates in a blockchain network by running the network’s software which helps it to validate transactions.
- Blockchain nodes usually communicate with each other to verify transactions.
- The more nodes a network has, the more it is decentralized.
What are blockchain nodes?
The question of what is a node in blockchain is best answered by visualizing a blockchain network. To be a network, it needs several intercommunicating computers/ devices that can write, upload and verify data that goes to the software behind the network. For instance, if you want to run a node for Bitcoin (CRYPTO:BTC), you can download the Bitcoin Core software on a computer and run it without discrimination.
As such, a blockchain node refers to a device or computer running a blockchain network software and communicating with others to verify data uploaded in the blockchain. Running a blockchain network’s software on different computers increases its security and enhances its decentralization.
For most blockchain networks, anyone can run a node; however, some networks are choosy and only allows select nodes to run their software and participate.
How does a blockchain node work?
The main roles of a blockchain node are broadcasting and validating transactions. Once a user submits a transaction, it’s received by a node that then broadcasts it to all other network nodes.
Once the transaction is read by all nodes and verified that the user has enough funds to satisfy it, they authorize the user to complete the transaction. Since all nodes verify a transaction in a blockchain, a transaction can only be cancelled or rejected if 51% of the available nodes confirm it to be wrong.
As such, the 51% attack can be made, but it’s not easy in a decentralized network. A decentralized network is one where different nodes are available and are not led by a single user or a block of users that can concur to Sencor select transactions. That means the higher the number of nodes, the higher the security of a blockchain against the 51% attack.
Once a node validates new transactions, it is grouped into blocks that are then added to the blockchain following the set rules of the network. After that, no node in the network is allowed to change the contents of any block, making the data recorded in the network immutable.
by Samuel Mbaki | Jun 5, 2023 | Finance
Key Points
- Saudi Arabia has pledged further voluntary oil production cuts, increasing oil prices.
- According to a statement by the energy minister, the Kingdom is set to decline its production by a million to 9 million barrels a day.
- OPEC+ contributes around 40% of the world’s oil supply and plans to increase its oil production cuts over time.
Oil prices to keep increasing as production cuts increase
Oil prices rose on June 5, 2023, following news that Saudi Arabia had decided to slash their daily production by 1 million barrels. However, the Organization of the Petroleum Exporting Countries and its partners (OPEC+) have not changed their planned oil production cuts for the remainder of the year.
The world’s leading oil exporter Saudi Arabia has said that the new production plans will take effect in July. Following the release of the information on Sunday, International benchmark Brent crude futures traded a barrel at $77.34 (1.6% higher) at 11.15 a.m. London time and the Intermediate futures stood at $73.01, over 1.7% higher.
Several oil producers had revealed a combined 1.66 million barrels per day cut by the end of the year. This report shook the market a bit, but it didn’t expect Saudi Arabia to be cutting its production by a whole million barrels in a day so soon.
Whether the other countries will choose to reduce their oil production by higher than the set limit by OPEC+ remains to be seen. However, you can expect drastic changes in oil prices throughout the year. Keep watching Fintech Express for updates on this and other finance-related stories.
by Samuel Mbaki | Jun 5, 2023 | Banking
Key Points
- The IMF Managing Director Kristalina Georgieva has expressed concern with the federal reserve not pumping brakes on lending.
- Georgieva also stressed people being active in checking the world economic trends and being agile to adjust correctly as the trends change.
- Meanwhile, most global central banks are tightening their monetary policies to tame inflation rates.
IMF wants to see more federal banks pulling back from lending
In a report by CNBC, the International Monetary Fund is concerned that it is yet to see enough banks pulling back on lending, which could cause them to change course with their rate-hiking cycles.
In the report, IMF Director Kristalina Georgieva told CNBC:
“We don’t yet see a significant slowdown in lending. There is some, but not on the scale that would lead to the Fed stepping back.”
In a May report, the Federal Reserve showed a similar concern over lending and the current economic conditions. The report warned that lenders are worried about the capacity of Americans to continue borrowing, which has resulted in mid-size financial institutions in the country tightening the lending standards for households and businesses.
Fed’s loan officers added that they expect the lending issues to continue through next year as there are low economic growth forecasts already with deposit outflows increasing, which shows a reduced tolerance for risk.
Georgieva noted:
“I cannot stress enough that we are in an exceptionally uncertain environment. Therefore pay attention to trends and be agile, adjusting — should the trends change.”
She added that the positive jobs report shows that the U.S. could continue to hike rates further, which could eventually see the unemployment rate go beyond 4% or 4.5%, significantly higher than the current 3.7%.
The world economy continues declining
Georgieva’s comments come when global economies are shrinking, with a debt of over $305T being recorded. Multiple economies are also struggling with high inflation rates and increased living costs. The U.S. is just days after passing and signing the Fiscal Responsibility Act into a law that seeks to extend its debt ceiling.
The U.K. also struggles with high inflation rates following its deteriorating economy and the monumental Brexit failure. It is being tipped to follow Germany in entering a recession as its central bank continues to push interest rates higher to combat inflation, risking reversed economic growth.
The only unicorn left, the Chinese economy was tipped to resuscitate the world economy upon its reopening. However, it’s been performing dismally off late. It has also shown signs of slowing down, with its stock markets seemingly entering a bear market.
