November 22, 2023

Markets Insights

Economic Calendar

Next FOMC meeting: Dec 13th 2023

  • Probability of a 25bps ease → 0%
  • Probability of a 0bps hike → 100%

The News Room

Department of Justice Imposes Historic $4.3 Billion Fine on Binance in Landmark Case

The Department of Justice (DOJ) has imposed a historic $4.3 billion in fines and forfeitures on Binance, one of the largest in U.S. history, for a range of financial crimes, including anti-money laundering violations, unlicensed money transmitting, and sanctions law breaches. During a press conference featuring high-profile officials such as Attorney General Merrick Garland and Treasury Secretary Janet Yellen, Binance's CEO Chengpang Zhao announced his resignation in light of the charges. The DOJ's indictment accused Binance and Zhao of facilitating money laundering and knowingly violating U.S. financial laws, citing internal communications that revealed a disregard for compliance. As part of the settlement, Binance pleaded guilty to the charges and agreed to a five-year oversight period by the Treasury Department, allowing the exchange to continue its operations. Notably, the Securities and Exchange Commission, which is also pursuing a case against Binance, was absent from the announcement, while the Commodity Futures Trading Commission (CFTC) had previously sued Binance and Zhao for related offenses. This enforcement action represents a significant crackdown on financial misconduct in the cryptocurrency industry.

SEC Recently Met with Grayscale for Spot Bitcoin ETF Listing, Memo Shows

Grayscale Investments continues to engage with the SEC, pushing for the conversion of its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. A recent meeting between Grayscale and SEC officials discussed the potential listing of GBTC shares on NYSE Arca. This follows Grayscale's latest SEC filing for the trust conversion and a court mandate affirming the need for the SEC to reconsider Grayscale's application. As Grayscale awaits approval, it has also arranged for BNY Mellon to act as the transfer agent for GBTC shares. This development is part of a broader trend with other asset managers like BlackRock and Fidelity also seeking SEC approval for their spot Bitcoin ETFs, indicating a collective move towards mainstreaming Bitcoin investment products through regulated financial vehicles.

Phoenix Group's Oversubscribed IPO Signals Strong Investor Interest in UAE's Cryptocurrency Sector

Phoenix Group, a UAE-based cryptocurrency miner, has successfully closed its initial public offering (IPO) on the Abu Dhabi Securities Exchange (ADX), with the offering being 33 times oversubscribed. The company aimed to raise 1.36 billion dirhams ($368 million) by offering 907,323,529 shares at 1.50 dirhams each, representing a 17.64% stake in the business. Phoenix provides mining services through hosting and cloud-based platforms and runs a crypto exchange named M2, which uses its native Ethereum-based token, MMX. The IPO's significant oversubscription, especially among retail investors who oversubscribed by 180 times, demonstrates strong investor interest. The company's shares are set to begin trading on December 4, and this successful IPO underlines the UAE's status as a leading digital asset-friendly jurisdiction with clear regulatory guidelines.

Trading Desk Insights

Stocks advanced on Wednesday, propelled by a decline in yields to their lowest point in a span of two months. Traders sought to wrap up their activities on an upbeat note ahead of the Thanksgiving holiday.

A streak of five consecutive days of gains for the S&P 500 and Nasdaq came to a halt on Tuesday, as the red-hot November rally momentarily paused. This retreat followed the Federal Reserve's recent meeting notes, which signaled a commitment to maintaining a tight monetary policy and provided no hints of imminent interest rate cuts.

The New York Stock Exchange is scheduled to be closed for Thanksgiving on Thursday and will have an early closure on Friday.

In a noteworthy development, OpenAI has reinstated Sam Altman as CEO, less than a week after his dismissal by the Board.

Bitcoin has trended lower since the Binance settlement press conference, but its impact on the broader cryptocurrency market has not been substantial. Some view this as a necessary step to purify the industry from undesirable actors. Market participants appear unfazed by these developments and anticipate a heightened emphasis on compliance-related matters following Binance's ordeal, along with increased focus on risk management post the FTX collapse.

ETHBTC is currently trading 3% higher, serving as a barometer for risk-on sentiment. In the realm of altcoins, investors are clearly buying into the dip, with SOL up by 7%, UNI surging by 15%, AAVE advancing by 12%, LINK climbing by 8%, and more.

Binance garnered significant attention due to its recent settlement with the DOJ, agreeing to a hefty payment of $4.3 billion. CZ, the CEO, has stepped down and was released from custody on a $175 million personal bond, coupled with a $50 million fine; however, no prison sentence was mentioned.

The Binance settlement has had a noticeable impact on the exchange's order book liquidity, posing challenges for large traders. Liquidity for top trading pairs, as measured by 0.1% and 1% market depth indicators, has declined by 25%.

Lastly, Binance has successfully processed close to $1 billion in withdrawals over the past 24 hours. While this represents a substantial amount, it remains relatively insignificant when compared to the exchange's total reserves.

Technical Charts


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