All posts by Zakir Khan

A significant stride has been made in Canada’s cryptocurrency realm

With Balance, a reputable crypto custodian within the country, obtaining official custodian status this week. Historically, assets of Canadian Exchange Traded Funds (ETFs) have been held in the US under sub-custody arrangements with firms such as Coinbase and Gemini. Yet, this new advancement has led Balance CEO George Bordianu to advocate for a repatriation of these assets.

Transforming the Structure of Cryptocurrency Stewardship in Canada

At present, ETF providers such as 3iQ, Purpose Investments and Evolve employ prominent US exchanges like Coinbase and Gemini to protect the crypto assets which underpin their funds, instead of keeping them within Canadian territories. With Balance’s recent elevation to custodian status, Bordianu envisions the domestic retention of these ETF assets. He articulated to CoinDesk, “We have billions’ worth of retail assets within Canada’s crypto ETFs currently held in the United States. We are enquiring to repatriate those assets.”

Whilst other firms depend on sub-custody partnerships, Balance stands apart by attaining qualified custodian status through the power of its proprietary technology stack. Balance rejects the use of third-party technology such as Fireblocks or Digital Vault and instead leans on its homegrown solution.

This recent progression mirrors the rapid expansion of the crypto sector in Canada. Bordianu contended that although the amount of crypto owned by Canada’s ETFs may appear insignificant at the moment, the rising areas of tokenized real-world assets and stablecoins necessitate Canada’s need to fortify its own infrastructure to oversee these digital assets.

Bordianu has compared the present situation to the odd scenario of the Toronto Stock Exchange

Relying on the American Depository Trust & Clearing Corporation for the clearance and settlement of all transactions. He described this as “absolutely bonkers.” By receiving the qualified custodian status, Balance aims to optimize processes for asset managers and make it more economically viable to produce additional ETFs and mutual funds in Canada.

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In a recent update, FTX, the now-defunct crypto exchange, has struck a settlement deal with Bybit, a cryptocurrency platform based in UAE.

The agreement allows FTX to withdraw assets amounting to $228 million, a move expected to help repay several creditors affected by the collapse of FTX in 2022. This has been the outcome of intricate negotiations spanning several months between FTX, under the management of Sam Bankman-Fried facing a 25-year sentence at the time.

Elaborating on the Settlement

According to a report on Bloomberg, to reach this agreement FTX must drop all lawsuits against Bybit Fintech Ltd. and its related entities. The manner in which FTX received the green light from the US Bankruptcy Court for the District of Delaware for this settlement is laid out in the company’s application. As per the agreed terms, FTX is set to recoup around $175 million in digital assets held on Bybit and sell BIT tokens to Bybit’s investment wing, Mirana Corp., for an estimated $53 million.

Before FTX crumbled, it filed a lawsuit against Mirana, arguing that the latter took out assets valued at $327 million from FTX, using extraordinary access, while other users could not reach their funds. The settlement now states that those, who withdrew funds just prior to FTX’s bankruptcy announcement, may receive creditor claims, representing 75% of their total balance at the time bankruptcy was filed by FTX. FTX regards this agreement as beneficial, translating into significant net savings for the debtor’s estates.

In its submission, the company expressed confidence in the settlement, stating, “With the Settlement Agreement, the Debtors will be recovering substantially all that they are seeking. This settlement will aid in securing a significant recovery for stakeholders, while bypassing the expenses and insecurity connected to the ongoing litigation and potential enforcement difficulties overseas.”

Implications for Creditor Paybacks and Market Impact

With K33 analysts Vetle Lunde and David Zimmerman providing future outlooks, the debt recovery process for the creditors is anticipated to set off in late Q4, 2024, and extend into the early first quarter of 2025. The pair envisage that repayments will likely commence within a 60-day period from the court’s effective date, which is speculated to be determined around mid-November. The U.S. Bankruptcy Court’s Judge John Dorsey has ratified a reorganization scheme for this purpose, almost two years post the demise of FTX.

Some industry analysts speculate that injecting these funds back into the market might elevate Bitcoin prices. Yet, due to credit funds already having acquired a significant amount of claims, ranging between $14.4 billion and $16.3 billion, it seems improbable that these assets will be reintroduced to market circulation. Additionally, 33% of the remaining claims are linked to individuals and entities facing sanctions or lacking customer verification, a situation that precludes claim retrieve due to inadequate validation. Consequently, only an estimated 20-40% of the standing $8 billion will re-enter the market, largely because FTX’s trader base primarily consisted of “aggressive, crypto-native risk-takers”.

Currently, the native token of the exchange, FTT, is being traded at $1.80.

Vienna-based Bitpanda, a leading crypto trading platform financially backed by PayPal co-founder and billionaire investor, Peter Thiel, is reportedly examining a range of strategic possibilities including a prospective initial public offering (IPO) in Frankfurt.

The platform is known to engage in talks with reputable financial institutions like Citigroup Inc. and JPMorgan Chase & Co, according to a report by Bloomberg.

Bitpanda Valuation May Exceed $4 Billion

Should an IPO occur, Bitpanda’s estimated value could reach or surpass $4 billion, says sources privy to the situation. However, the platform may eventually decide against any transaction, revealing that an IPO is only one of the options under consideration. Neither Citi nor JPMorgan spokespersons have been forthcoming on the matter, and Bitpanda has not issued an official statement or responded to requests for more information.

Established in 2014, Bitpanda provides various trading services such as cryptocurrencies, equity derivatives, and commodities. In August of last year, the platform reached a valuation of $4.1 billion due to a successful funding round that generated $263 million, attracting notable investors like Valar Ventures by Thiel, entrepreneur Alan Howard, and REDO Ventures.

Potential Record Profit in 2024

Bitpanda’s financial outlook appears optimistic as it anticipates setting new profit records in 2024. In just Q1 2021, the platform generated revenue exceeding €100 million (approximately $108 million), symbolizing a significant shift from the previous year when it recorded a pre-tax profit of €13.6 million but also experienced losses over €130 million in 2022.

The platform has made considerable strides in improving its user interfaces, illustrated by its announcement in June of furnishing its German clientele with Deutsche Bank IBANs to facilitate real-time transfers in and out of brokerage accounts.

This move comes amidst the flourishing cryptocurrency market, demonstrated by the substantial progress of the most significant cryptocurrency, currently nearing its all-time high of $73,700 attained in March 2024.

After U.S regulators permitted Bitcoin exchange-traded funds (ETFs), interest in digital assets among potential investors has surged. While a moderate correction period followed this growth, the market has been in recovery mode recently.

The market’s optimism is further fueled by speculations that the pro-crypto Republican candidate Donald Trump might prevail in the forthcoming U.S presidential elections. Trump’s pledge towards new regulations and a supportive stance for innovation and growth in the crypto space has market analysts forecasting a rally towards year-end that could catapult Bitcoin to new peaks.

The total crypto market cap currently sits at a robust $2.3 trillion, symbolizing a significant recovery from last week’s $200 billion dip.

The Continual Development of Cryptocurrency and AI Integration

Technological innovations offer the exciting possibility of bringing together artificial intelligence (AI) and cryptocurrency. This amalgamation presents a significant digital economy metamorphosis with an increased focus on accessibility, transparency, and the inception of the ‘Agentic Web.’ According to the Blockchain.News report, “Through blockchain technology, AI’s potential for expanded accessibility, transparency and augmented use cases are achieved.”

The Rise of the ‘Agentic Web’

A critical shift in this budding tech landscape is the ‘Agentic Web,’ which combines the power of AI agents with cryptocurrency architecture to spur economic development. As Blockchain.News explains, “Autonomous transactions and user intentions fulfillment could be delegated to these AI entities by leveraging crypto wallets, decentralized computational and data resources, or stablecoins for payments.” This could result in a prolific shift in the digital economy towards an agent-centric model.

Cryptocurrency’s inherent efficiency, borderless nature, and programmability, complemented by AI’s capabilities, set the stage for a new epoch of smart, sovereign systems. Moreover, this collaboration “could potentially allow users to exercise greater control over their personal data and inspire new blockchain network applications and experiences.”

Despite the sizable investment in the AI industry, nearing $290 billion in the last five years, it still faces issues such as data privacy, ethical quandaries, and centralization threats. However, the coalition of cryptocurrency and AI could provide answers, presenting a decentralized, verifiable, and resistant to censorship framework.

The combined potency of AI and cryptocurrency opens numerous unique opportunities. These range from “compute: Decentralized networks providing GPU resources for AI programmers, data: Decentralized access and management of AI data pipelines, middleware: platforms enabling creation and implementation of AI models and agents, and applications: Consumer-oriented products utilizing onchain AI mechanisms.”

Challenges such as data availability and computational resources scarcity persist, but the integration of these technologies could catalyze innovation, leading to more transparent and autonomous systems. As these advancements unfold, it is crucial for stakeholders to adjust suitably to tap into the full potential of this integration.

In closing, the fusion of cryptocurrency and AI heralds a promising technological breakthrough. The potential to reshape digital interfaces and economic frameworks is vast. As the development continues, further investment and exploration become more intriguing and provide fertile ground for both commercial and technological growth. These advancements bear relevance to the central themes of blockchain technology and the union of cryptocurrency and AI.

Michael Saylor’s MicroStrategy Continues to Make Steady Progress in Crypto Market

Michael Saylor’s executive enterprise, MicroStrategy, witnesses steady strides in the crypto market with remarkable development in trading volume and overall market value. Its share trading volume escalated to 17.65% of Nvidia’s in October, an achievement to recognize given that MicroStrategy’s market cap sits only at 1.5% of Nvidia’s.

The upward trajectory marches on. MicroStrategy is currently just 8% short of attaining the much-anticipated valuation of $50 billion in market cap. This swift rise mirrors the mounting investor attraction towards the firm and the significant surge of over 240% year-to-date noticeable in its stocks.

Bitcoin’s Impact on MicroStrategy’s Upward Trajectory

Bitcoin’s role in MicroStrategy’s recent victories is crucial, as the company incorporated it as a treasury asset in August 2020. The consistent mid $60,000 range trend of bitcoin has resulted in the continuous growth of the company’s bitcoin stash. Data from the MSTR tracker shows the company’s net asset value (NAV) premium currently holds steady around 3, marking its highest since the beginning of 2021. Based on the calculations of MicroStrategy’s market cap in relation to its bitcoin value, the firm realizes a year-to-date gain exceeding 240%.

Compared to Nvidia’s 192% leap, this trend puts MicroStrategy ahead by a significant margin. Analyzing the companies’ performance since August 2020, the results authenticate MicroStrategy’s astounding growth – value enhancement of 1,800% against Nvidia’s 1,150%. This growth trajectory not only highlights the triumphs of MicroStrategy but also the far-reaching implications of its bitcoin adoption strategy.

While the escalating trading volume coupled with MicroStrategy’s share price increase may suggest an ongoing uptrend, it may also serve as a warning. A continuing volume increase compared to Nvidia could indicate a growing speculative bubble. It’s noteworthy that MicroStrategy saw a similar surge in trading volume during the bullish moment of 2021—peaking over $130 on February 9 with a volume of 23.2 million, a mere 8% equivalent of Nvidia’s volume that day.

The data mentioned throughout the article adheres to the records available on Investing.com and TradingView as of October 2024. As of the same date, the writer also holds shares in MicroStrategy (MSTR)..

Data from the options market suggest that there is less than a 10% possibility of Bitcoin’s (BTC) price surpassing the $100,000 mark before the year concludes.

This prediction seems to counter the expectations of many retail and sophisticated investors who have projected a potential price hike for the major cryptocurrency before this year’s end.

According to the current pricing at Deribit for Bitcoin options, there is roughly a 9.58% chance of Bitcoin’s price surpassing $100,000 by December 27th. However, a higher probability pegs the price climb at $82,000, as highlighted by an informed analysis. Note that the probabilities in the options market are vulnerable to quick changes due to fluctuating market conditions.

The Feasibility of $82,000 and Bitcoin Volatility

Several traders have suggested to CoinDesk that Bitcoin could see its price rise to the $80,000-$82,000 range by the end of the year, despite the results of the crucial U.S elections due on November 5. The options market notes that there might be a potential 22% price swing in either direction by late December, thereby potentially paving the way for an increase beyond $80,000 by the close of the year.

BloFin’s head of options trading and research, Griffin Ardern, explained to CoinDesk that the current market-determined volatility of Bitcoin at-the-money options expiring on December 27 is approximately at 54%. In the best case scenario, this prediction suggests that BTC’s price could witness an upward shift of more than 22% to around $82,000 by the year’s end. Ardern also warned that there could also be a similar downward swing.

A Market Full of Uncertainties

Given the fluctuating market conditions, the probabilities in the options market can also shift quickly. This means that the possibility of Bitcoin attaining $100,000 by the year’s end could improve if there’s a leap in implied volatility and the prices hit an all-time high. Market volatility could also see a boost arising from the much-anticipated U.S. presidential election, scheduled for November 5, which could significantly impact the digital assets industry regulations.

CEO of Two Prime, a SEC-registered digital assets advisory, Alexander Blume, via an email, has advised cryptocurrency investors to brace themselves for substantial price volatility post the presidential election, as the election results could significantly influence the digital assets industry.

United States Department of Justice Accuses Key Cryptocurrency Figure of Illicit Money Movement

The United States Department of Justice (DOJ) has levelled accusations of illicit money movement against Maximiliano Pilipis, a key figure linked to the operation of a cryptocurrency exchange. The charges revolve around Pilipis’s alleged association with the notorious darknet marketplace, Silk Road, in running AurumXchange, where he purportedly processed millions of dollars.

On the 28th of October, the DOJ disclosed that a sizable proportion over $30 million, flowing through around 100,000 transactions within AurumXchange, originated from accounts maintained on Silk Road. This infamous platform, owned by American Ross Ulbricht who had a alias “Dread Pirate Roberts,” served as a nexus for illicit drug sales and anonymous goods trading.

Allegations of Unlicensed Operations, Money Laundering & Tax Evasion

The DOJ pronounces that Pilipis unlawfully accumulated substantial revenues from the exchange of 10,000 Bitcoins, which amounted to near $1.2 million back then, among the vast sums circulated within the platform. From 2009 to 2013, Pilipis ran AurumXchange without a requisite license, until FBI closed down Silk Road that year.

Scrutiny into money laundering activities opened a can of worms, shedding lights onto Pilipis’s alleged evasion of tax returns for the income generated in 2019 and 2020. The law enforcement authorities assert that Pilipis overlooked the federal rules and reporting obligations hinging on cryptocurrency exchanges. He deliberately bypassed registering with the US Treasury Department and submitting reports of the exchange activities to the federal government.

In addition, the charges against Pilipis involve his neglect in enforcing the Know Your Customer (KYC) protocols, along with breaches of Anti-Money Laundering (AML) and counter-terrorism financing (CTF) regulations.

Upon the closure of AurumXchange, it is suspected that Pilipis scattered and transferred the Bitcoin and other assets to launder and mask the profits from the illicit activities. He is further implicated in converting his pile of cryptocurrency into USD for property acquisitions in Indiana.

The income generated from these assets in 2019 and 2020 was in the range of $100,000s. But, Pilipis allegedly did not declare these in tax returns for those years. The federal grand jury consequently handed down an indictment superseding the original charges against Pilipis, slapping him with five counts of money laundering and two counts of deliberately evading tax returns. If the court finds him guilty, he might face a jail term of a decade and financial penalties of $250,000. The final verdict will be in the hands of a federal district court judge, who will mull over sentencing guidelines and other pertinent statutory factors.