ECB Promises to Pump Money; IMF Praises Fed for Being ‘Highly Effective’ at Overshooting 2% Inflation

Amidst this, former BitMEX CEO talks about an investor’s ability to really outperform $4.72 trillion of money created out of thin air in 2021.

European Central Bank (ECB) keeps its monetary policy steady and will continue to be more accommodative for a more extended period.

The central bank has committed to purchasing 1.85 trillion euros ($2.2 trillion) of bonds until March 2022, and policymakers voted to keep this stimulus injection into the market going for the time being.

Interest rates were also left unchanged, with that on the primary deposit facility remaining at 0.5%, the benchmark refinancing rate at 0%, and the marginal lending facility at 0.25%.

Additionally, ECB said it wanted to see inflation stabilizing at 2% over the medium terms adding, this may also imply a transitory period where inflation is “moderately above target.”

Prices rose 1.9% this year to June in the 19-member euro bloc, down from 2% this year to May, which has the ECB expecting inflation to drop, forecasting a decrease of 1.5% – 1.4% in 2022 and 2023, respectively.

The central bank had changed its guidance “to underline our commitment to maintain a persistently accommodative monetary policy stance to meet our inflation target,” said ECB President Christine Lagarde.

“There is still a long way to go before the damage to the economy caused by the pandemic is offset.”

On Friday, ECB member Francois Villeroy de Galhau, who is also the governor of the Bank of France, said it was justified to keep an accommodative monetary policy for now.

Villeroy also said that the ECB sees the midpoint of its forecast horizon for a 2% inflation target coming in around 12-18 months in the eurozone.

Fed “Highly Effective”

As for the US, the Federal Reserve has started to talk about tapering, but Chair Jerome Powell has assured that it is “still a ways off,” and President Joe Biden gave the Fed his blessing to “take whatever steps necessary” to support a strong economy.

The International Monetary Fund’s Executive Board also commended the Fed for being “highly effective” at managing the COVID-l9 crisis and supporting recovery with its commitment to overshoot a 2% inflation target in the near term.

While raising concerns about higher interest rates that will drain capital flows from emerging markets, the board also said that the Fed must carefully communicate its thinking to ensure the eventual withdrawal of monetary accommodation. The IMF said this scaling back,

 “will require deft communications, under a potentially tight timeline, to avoid market misunderstandings, volatility in market pricing, and/or an unwarranted tightening in financial conditions.”

The Fund’s board also said that the US should prioritize spending towards programs that have the most significant impact on productivity and that more could be done to boost tax revenues.

“Don’t Get Shook.”

In 2021, a total of $4.72 trillion has been created out of thin air, collectively in the US, China, and EU. “If the quantum of money increases, it must go somewhere,” noted Arthur Hayes, former BitMEX CEO, in his latest write-up.

“The Fed has removed $1.4 trillion of the highest quality collateral from the system…Whatever anyone says about a taper in the future, in the present, asset managers must replace this collateral with higher risk stuff.”

The Fed’s balance sheet has expanded at a YoY pace of +22.74% and +13.21% YTD. ECB grew its balance sheet by +25.18% YoY, and YTD +13.34%, and China’s most recent 2Q21 YoY GDP print was +7.9% using an 11% growth in credit.

So, how does one outperform this? Bonds are certainly not the answer.

The US GDP forecast for 2021 is +6.60%, vs. the 10-Year bonds that yield 1.20%, equating to a rough negative real yield of -5.40%. In the “strongest Eurozone economy,” Germany, 2021 GDP is expected to print at 4.5%, with real yields approaching negative 5%.

Here, crypto comes as a clear winner, with Bitcoin up 10% YTD and Ethereum 182% and about 250% and 700% YoY, respectively.

“The data is clear – central banks continue to print money. When / if that changes, the data will show us. There is no need to predict when it stops if you own scarce assets that appreciate in fiat terms at least at the same pace of balance sheet expansion. On the past 6-month horizon, crypto underperformed, but from the onset of the COVID pandemic till today, crypto markedly outperformed as central bankers stepped on the gas. Don’t get shook.”

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Author: AnTy

HRF Bitcoin Development Fund & BitMEX Disburses $210,000 in Grants to Developers

HRF Bitcoin Development Fund & BitMEX Disburses $210,000 in Grants to Developers

The Bitcoin Human Rights Foundation, or HRF, announced the release of a $210,000 grant to Bitcoin developers across the world in a blog post this Monday. The grants aim to enhance Bitcoin developments in scaling, encrypted messages, private wallets, and translation to Arabic.

HRF also partnered with BitMEX in offering a $150,000 grant to Bitcoin node scaling developer Calvin Kim, who is working on scaling the blockchain to use less storage space. BitMEX is set to renew its $100,000 grant with Kim, who started working on Bitcoin scaling in 2019, up to June 2022. The exchange already disbursed $30,000 to the developer in 2020. Bitcoin HRF will contribute $50,000 to advance Kim’s efforts in the scalability space.

Seoul-based Calvin Kim is working on the Utreexo project, which aims to reduce Bitcoin’s large file size and conserve hard drive space for nodes recording the transactions. He is working to make the project downloadable, allowing all Bitcoin unspent transaction outputs to be stored in kilobytes rather than gigabytes.

“Being financially stable has allowed me to focus more attention to furthering research and development of the Utreexo Project.”

Growing focus on Bitcoin’s development

The HRF’s Bitcoin Development Fund also announced grants to Bitcoin Core developers Dhruv Mehta and Abubakar Nur Kahlil, build fast and cost-effective Bitcoin wallets. Both will receive $50,000 each for their developments using Lightning Network across the year.

With the gospel of Bitcoin preaching far and wide, HRF is looking to advance the blockchain’s development in the Arabic world, granting “Arabic_HODL” $10,000 to translate Bitcoin content into the Arabic language.

The Development fund was also awarded to Breez, a Lightning Network wallet aiming to build an encrypted chat channel (similar to Telegram), improve node capabilities and introduce Tor support. Finally, the HRF also granted Sphinx Chat, a Lightning wallet aiming to build an encrypted chat room with a built-in directory allowing users to connect over the Bitcoin blockchain instantly. Each will receive a $25,000 grant from HRF.

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Author: Lujan Odera

Former BitMEX CEO Arthur Hayes Turns Himself in To US Authorities

Former BitMEX CEO Arthur Hayes Turns Himself in To US Authorities

Former chief executive officer of cryptocurrency exchange BitMEX, Arthur Hayes, has turned himself into the US authorities on Tuesday in the case against the platform, him and other top executives, Benjamin Delo and Samuel Reed, for violating the Bank Secrecy Act.

Hayes, a Singapore resident, surrendered in Hawaii six months after federal prosecutors charged them with conspiring to skirt U.S. laws requiring the implementation of money-laundering controls.

As agreed previously, he appeared before a federal judge in Honolulu and was released on a $10 million bond.

Hayes’ lawyers said in a statement that the “self-made entrepreneur” had been wrongly accused of crimes that he didn’t commit. Having already voluntarily appeared in court, Hayes now looks forward “to fighting these unwarranted charges,” they added.

Launched in 2014, Seychelles-based BitMEX was first probed by CFTC in 2019 regarding whether the exchange broke the rules by allowing US customers to trade on the platform. Serving US customers requires registration with the agency.

Back in October, the same day charges were unveiled by the agencies; Reed was arrested in Massachusetts while Delo turned himself in March. Delo has vowed to fight the charges, calling them unfounded and an overreach by U.S. authorities. Both have been pleaded not guilty and released on bond.

Gregory Dwyer, the company’s first employee and head of business operations who was also charged, meanwhile remains at large. Dwyer’s lawyers said they have been in touch with the government and have informed them of his whereabouts as well. The lawyers said in a statement,

“They are also aware that he has every intention to defend himself in court against these meritless charges and is eager to do so.”

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Author: AnTy

Arthur Hayes & other BitMEX Founders Discussing Surrender with the US Authorities

Arthur Hayes & other BitMEX Founders Discussing Surrender with the US Authorities

Arthur Hayes, the former CEO of crypto exchange BitMEX who is currently in Singapore, is proposed to surrender to the authorities in Hawaii on April 6, according to a court filing.

Arthur Hayes has also discussed appearing remotely in New York court, said Jessica Greenwood, assistant U.S. attorney, according to a transcript of a Feb. 9 hearing. Arrangements to allow Hayes to live abroad and travel to the US for court appearances are under discussion as well. The transcript reads,

“We have discussed with counsel how to arrange for a voluntary surrender, and he has proposed appearing within the United States in Hawaii and having his initial appearance there and then, subsequent to his presentment in Hawaii, to arrange for a virtual appearance before your Honor rather than appearing in the Southern District of New York physically, that he would appear before your Honor remotely, having surrendered within the United States to the marshals.”

Another co-founder Ben Delo is planning to surrender in New York before the end of March, regarding which, the US attorney said, they are “working with the FBI and Border Patrol to obtain immigration authorization” due to complications surrounding the UK travel ban.

Greg Dwyer, who also co-founded the exchange, has declined to surrender as Greenwood said, “we were not able to negotiate a voluntary surrender with him.” As such, the US has launched extradition proceedings for him from Bermuda.

Hayes and other executives were charged with violations of the U.S. Secrecy Act last year.

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Author: AnTy

BitMEX’s Crypto Derivatives Exchange Now Has All Users As ‘Fully Verified’ Traders

BitMEX’s Crypto Derivatives Exchange Now Has All Users As ‘Fully Verified’ Traders

Cryptocurrency exchange BitMEX says all the users on its platform are now completely verified.

Last year, the company was having issues with U.S. regulators. As a result, the firm set out to make sure it completes its customer verification program to stay off regulators’ scrutiny.

The BitMEX User verification program was introduced on 28 August 2020. It required BitMEX users to follow a four-step verification process similar to the verification of IDs on several cryptocurrency exchanges.

The verification process takes only five minutes to complete the entire process. Users were asked to upload the proof of address and IDs, take selfies, and provide answers to multiple-choice questions before they can complete the registration.

The user verification deadline was on December 9th, as only verified users are allowed to make transactions, including deposits and withdrawals on the platform.

After the December 9th verification deadline, more than $100 billion worth of transactions have been exchanged, as the firm confirmed that 100% of its users are now completely verified.

BitMEX said that with the completion of the verification exercise, the Seychelles-based company had become one of the world’s biggest derivatives exchanges with a completely verified user-base.

In 2019, the Commodity Futures Trading Commission (CFTC) started investigating BitMEX to determine whether U.S. traders are using its platform.

Then last year October, the regulatory body filed a case against BitMEX for allowing users who are not fully registered to trade on its platform.

After the case, the exchange decided to employ a new compliance chief and shaken up its executive team.

“We’re pleased to confirm that our User Verification Programme has been successfully implemented,” the company stated in its blog.

A major milestone for BitMEX

Chief Compliance Officer of 100x Group Malcolm Wright commented on the development. He said BitMEX is now one of the few non-US-based crypto derivatives that have implemented the know-your-customer (KYC) policy for users to complete their transactions.

He said the achievement is a notable one because of the time and effort it takes to develop a vigorous compliance function that will meet international standards.

Chief executive Officer of the 100x Group Alexander Höptner also commented on the development. According to him, the user verification completion is a major milestone towards what the company hopes to achieve in the future. 100x Group is the holding structure for BitMEX.

He further revealed that it would help BitMEX become a high-performance platform with open-interest and top-level liquidity. Höptner says it places the company in an excellent position to increase both the institutional and retail investors.

It will further give users the chance to boldly trade crypto derivatives without sacrificing performance, liquidity, or security.

BitMEX’s technology has been regarded as the best in class because of its top tier product innovation, Wright added. As all users on the platform are completely verified, the company has shown its commitment to maintaining the legal requirements to operate in any international environment, he stated.

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Author: Ali Raza

BitMEX & Founders Sued Again for Market Manipulation, Racketeering, and Money-Laundering

BitMEX legal woes appear to be far from over after another lawsuit was filed against the crypto derivatives exchange. The lawsuit filed in a California court by a Romania resident Păun Gabriel-Razvan claims that BitMEX parent company, HDR Global Trading Limited, and its founders engaged in illegal activities, including market manipulation, racketeering, and money-laundering.

With the company’s former CEO Arthur Hayes still at large, it has been a couple of rough months for BitMEX since the DoJ and CFTC initiated lawsuits against the firm. The trend is now picking on an individual scale as more people seek to sue BitMEX for ‘alleged’ manipulation tactics through the exchange’s internal trading desk.

The New Lawsuit Against BitMEX

The lawsuit by Păun Gabriel-Razvan comes barely a month since a Moscow based resident filed a similar complaint by the name Dmitry Dolgov. Interestingly, both plaintiffs are being represented by the same counsel who goes by Pavel Pogodin; this attorney works at Consensus Law. The latest filing claims that BitMEX facilitated illegal finance activities by skipping crucial KYC and AML practices hence,

“Hackers, tax evaders, money launderers, smugglers, drug dealers all flocked to BitMEX flooding the platform with hot money,”

It goes to highlight that BitMEX directly benefited from market manipulation through its internal trading desk, giving the following example;

“A money launderer (Defendant) would open two exchange accounts – a helper account on one or more exchanges used by BitMEX to calculate its index price (Coinbase Pro, Kraken, and BitStamp) and a winner account on BitMEX.”

The court filing details,

“The money launderer would then enter into a large leveraged derivatives position on BitMEX and immediately execute market orders from the helper account with maximum slippage to move the index price in a favorable direction.”

According to Pogodin, who spoke to the Block, his client lost 247.94 BTC as a result of these malpractices. They are now seeking 3 times compensation, translating to around $12.8 million as per prevailing market prices. The suit also seeks punitive damages worth $50 million per California’s law coupled with attorney fees, costs, and interest on the defrauded Bitcoins. Pogodin further noted that more lawsuits against BitMEX would probably follow as more ‘victims’ are coming forward.

BitMEX to Fight the Issue in Court

However, BitMEX appears unbothered by Pogodin’s lawsuits against the firm, according to a spokesperson who shared sentiments with the Block. The spokesperson said that they will pursue the issue through litigation and are optimistic that the courts will rule in the favor,

“As we’ve said before, regrettably, Mr. Pogodin operates just like a patent troll, filing ‘copy and paste’ complaints against us based on rehashed information culled from the internet.”

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Author: Edwin Munyui

BitMex Onboards Eventus Systems For Trade Surveillance & Risk Management

BitMEX, one of Bitcoin’s top crypto exchanges, has partnered with the blockchain compliance centered firm Eventus Systems to make its platform AML compliant. Eventus Systems would also help in trade surveillance and risk management.

The partnership enables the crypto exchange step to become more compliant, keep an eye on fraudulent transactions, and monitor any unauthorized trading activity.

Malcolm Wright, chief compliance officer at 100x Group, BitMEX’s parent company, commented on their association with Eventus Systems and how it would help the digital asset exchange, he said,

“The selection of Eventus to support our critical trade surveillance and AML functions is an important part of our plans to mature our compliance capabilities, with a vision of leading the industry on best practice crypto-asset compliance.”

BitMEX trying to Mend its Ways After CFTC Charges

BitMEX exchange was recently in hot water after the financial watchdog CFTC filed a civil lawsuit against the exchange for money laundering and illegally operating in the US, just one month ago.

The exchange also has dealt with the U.S. Attorney for the District of New York filing of a criminal indictment against the owners Arthur Hayes, Ben Delo, and Samuel Reed for violating the Bank Secrecy Act. The feds went on arrest the BitMEX CTO Samuel Reed.

While the BitMEX exchange is acting fast to mend its issues, it is yet to be seen whether it can bounce back to its glory days after several civil lawsuits and the indictment against the owners.

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Author: Silvia A

BitMEX Now Former CTO, Samuel Reed, Released On A $5 Million Unsecured Bond

Troubled BitMEX exchange executive Samuel Reed released on a $5 million bond paid to the district of Massachusetts court following his arrest on October 1. According to a document first shared by The Block, the court approved the unsecured bond payment on October 3rd on condition that Samuel Reed will show up to court and accept to serve a sentence if convicted.

The U.S Department of Justice (DoJ) charged BitMEX executives on October 1 due to allowing unlicensed trading to Americans and violating the anti-money laundering and know your customer rules and measures set in place. Founders of BitMEX, Arthur Hayes, Samuel Reed, and Benjamin Delo have all been charged with breaking the Banking Secrecy Act, carrying a maximum jail term of five years. Reed was arrested in Massachusetts earlier this month charged with

“willfully failing to establish, implement, and maintain an adequate anti-money laundering (‘AML’) program at the Bitcoin Mercantile Exchange or ‘BitMEX.’”

This was the second arrest amongst the company executives with the head of business development, Gregory Dwyer, also charged and arrested.

Reed’s $5 million bond payment will be secured with a $500,000 cash payment. Reed and his wife’s passports have also been confiscated by the authorities to mitigate flight risk.

The U.S Commodities and Futures Trading Commission (CTFC) has also filed a civil lawsuit against the three founders in the Southern District Court in New York on the AML/KYC breaches on the exchange.

In an attempt to please customers and halt the hammering exodus from the exchange, HDR Global, wholly owner of the BitMEX exchange, announced the three executives charged would step back from their respective roles. Arthur Hayes and Samuel Reed have stepped back from their respective roles as CEO and CTO, respectively.

Despite the charges, 100x Group chairman David Wong said, “it will be business as usual” for the exchange aiming to provide the best features and “maintain the highest standards of corporate governance.”

Also Read: ‌DOJ’s First-of-its-Kind Crypto Framework Targets Decentralized, P2P Platforms & Privacy

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Author: Lujan Odera

After CFTC Files Charges, Chainalysis Labels BitMEX Crypto Exchange as a ‘High Risk’

BitMEX is set to be classified as a ‘high risk’ exchange by crypto intelligence firm Chainalysis; barely a week since its officials, including CEO Arthur Hayes, were indicted by the U.S Commodity Futures Trading Commission (CFTC).

Chainalysis advised its clientele, which includes government agencies, financial institutions, and crypto exchanges that it would consider BitMEX a ‘high risk’ label as of October 13 onwards.

This risk classification update on BitMEX means that Chainalysis clients who leverage the platform’s ‘KYT’ monitoring tool will be able to see both historical and future trigger alerts from the now haunted crypto derivatives exchange. Chainalysis shared the client advisory email with TheBlock,

“Any transfers from October 1st and later should be considered high risk. Compliance teams should also look back at older transfers, but given this change may trigger alerts on thousands of older transfers, it is reasonable to do that incrementally,”

However, a Chainalysis spokesperson said that the company’s clients could opt for their own risk tolerance levels and adjust accordingly. That said, they were keen to highlight it is their duty as a crypto intelligence firm to protect its clients, hence the consideration of ‘high risk’ based on criminal charges filed against a specific firm or its ownership/leadership.

Meanwhile, Arthur Hayes remains at large as BitMEX’s parent firm, HDR Global Trading Ltd, vows to take on the government against the recently filed charges. The accused are being pursued on grounds of violating KYC/AML rules and running an unregistered trading service. While it might be early to predict the future of BitMEX, the exchange is already taking a hard hit on its business. In fact, brutal skeptics like LMAX Group CEO, David Mercer, are of the opinion that recent developments will ultimately affect BitMEX’s going concern,

“I can’t see any significant institution wanting to continue to trade there.”

Also Read: ‘Warning Shot’ for DeFi: Here’s Why BitMEX Charges are ‘Incredible Bearish’ for this Burgeoning Sector

More Reading: After Targeting BitMEX, SEC Takes On John McAfee, Who Made Over $23M From Fraudulent ICO Promotions

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Author: Edwin Munyui

‘Warning Shot’ for DeFi: BitMEX Charges are ‘Incredible Bearish’ for this Burgeoning Sector

Prosecutors in the United States filed criminal charges against BitMEX, accusing it of violating the federal Bank Secrecy Act.

The CFTC has been investigating one of the biggest derivatives exchanges for some years now. Still, the effect of this news on the prices of digital currencies is expected to be bearish but only in the short term.

It will actually be bullish in both medium and long term and “likely be a boon for other regulated futures exchanges that offer significant leverage. Gambling is gambling,” said Bill Barhydt, co-founder & CEO at Abra.

But while regulation will help the market at large, it may not be such a good thing for the decentralized finance (DeFi) sector.

Time for DeFi Providers to Wake Up

According to Barhydt, it is actually a “warning shot” for DeFi service providers who think registrations don’t apply to them, “That’s pure nonsense. Lawyer up now.”

With the DOJ talking about the BitMEX co-funders to “soon learn the price of alleged crimes,” which will be paid in “fines, restitution, and federal prison time,” — it’s time for DeFi providers to wake up.

“DeFi services are not sufficiently decentralized today to have no central off switch. That means the companies behind them are at risk. Oracles are another problem…Set your alarms for the moment of truth,” Barhydt said.

As we saw only recently during the KuCoin hack, several crypto projects froze the stolen funds, putting a big question mark on the decentralized nature of them all, which wasn’t even the first time.

Given that DeFi has the highest beta, “flight to safety” is another reason why the BitMEX incident is not bullish for DeFi, said trader and economist Alex Kruger.

Moreover, while the authorities are going after managers individually over the criminal allegations, for the market, smart contract creators and promoters won’t be far fetched, regardless if it is even true, he added. And what the market thinks matters.

A Small Winter for DeFi

Over the past few months, the DeFi sector grew immensely, from about $1 billion in mid-June to $14.6 billion earlier this week, as per Debank.

For the past few weeks, DeFi tokens have been cooling down, with yields significantly lower than they were a month ago.

While the impact of the news on the price of Bitcoin and altcoin might be over, we could see “relative weakness across DeFi.”

As seen in the past 24 hours, the cryptos lost 4% to 12% compared to the DeFi ones, which are down 10% to 25%.

As we reported, a small DeFi winter has also been expected.

“Most DeFi bluechips trade like classic bubbles bursting,” said trader Qiao Wang who sees it more like the spring 2013 bubble, meaning this won’t be a multi-year nuclear winter, because of the strong and improving fundamentals, total market cap of these tokens still small, and more brrrr likely to come next year.

“2021 will be great, IMO,” he added.

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Author: AnTy