Banking Apocalypse: The Collapse of American Banks in 2023

Marina Meza
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Banking Apocalypse: The Collapse of American Banks in 2023

The American banking sector has been the backbone of the economy in the US.

The so-called American Dream is based on the promise of wealth and security. However, it seems to be collapsing. Silicon Valley Bank is one of the largest banks in the United States, which however has experienced one of the largest bank failures in that country.

For more than a century, US banks of all sizes have played a critical role in keeping the economy afloat. Over the years, the US banking industry has faced many crises, including the Great Depression of the 1930s, the credit crunch of the 1980s, and the financial crisis of 2008.

The 2008 crisis, triggered by the collapse of the housing market, wreaked havoc around the world, leading to recessions and job and home losses. This event had a significant impact on the global economy, with many countries entering global recessions and millions of people losing their jobs and homes. However, the industry has adapted through technology and regulations.

In 2023, though, the US banking sector experienced another devastating collapse, and many experts have warned that it may happen again.

Key Factors Contributing to the 2023 Collapse

The US banking sector collapsed due to a housing bubble, risky banking practices and regulatory mismanagement. Banks were heavily reliant on short-term loans, making them vulnerable to market changes.

When the US Federal Reserve raised interest rates, the banking industry came under enormous pressure, causing a decline in consumer spending and economic growth. The failure of Silicon Valley Bank caused a domino effect that led to the collapse of other institutions. Eventually, it was a major lender to tech startups, resulting in bad loans and defaults.

The interconnectedness of the banking system meant that the collapse of one institution could trigger a chain reaction throughout the system, leading to catastrophic failure. Over the course of five days in March 2023, Silvergate Bank and Signature Bank also failed, causing global bank share prices to decline sharply.

Based on this analysis, such collapse was driven by high leverage and an inability to pay down debts. It had a ripple effect across various industries, impacting society at large.

Impact of the Collapse on Society

The consequences of this collapse were devastating to the general public, leading to job losses, homelessness, and protests. Access to money became difficult, leading to chaos and long bank lines, with vulnerable groups such as low-income families and the elderly suffering the most.

The collapse highlighted the need for a stable and transparent financial system. In a time of uncertainty, Bitcoin emerged as a potential alternative to traditional finance.

Bitcoin operates independently of any government or financial institution, and its decentralized nature offers a level of stability and security that was lacking in traditional banking. It is designed to be fast, transparent, and accessible to anyone with an Internet connection. However, concerns about its adoption and regulations persisted.

Actions Taken by the US Government

US government interventions aimed at stabilizing the banking sector included capital injections, mortgage rate freezes, and additional financing for small businesses. The effectiveness of these measures remains a matter of debate.

Despite the challenges, Bitcoin’s transparency and security have attracted increasing popularity as a financial alternative during the crisis. So far, it cannot be denied that the collapse of the US banking sector has changed the financial landscape forever.

By Marina Meza

Judge Requires Kraken to Provide User Information to the US IRS

Audy Castañeda
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Judge Requires Kraken to Provide User Information to the US IRS

On June 30, a US court ruled that Kraken must provide its users’ information to the Internal Revenue Service (IRS), to investigate those who do not file their taxes. The court ruled that the IRS has a legitimate reason to obtain the information from the cryptocurrency exchange due to activity on the platform. President Joe Biden wants the government to close all loopholes that could result in low taxes for crypto investors.

A US trial court has ordered Kraken to provide its users’ personal information to the Internal Revenue Service (IRS) as part of the agency’s investigation into unreported taxes.

In a June 30 ruling, Magistrate Judge Joseph Spero ended Kraken’s fight to prevent the IRS from gaining access to its users’ data. The order would make the cryptocurrency exchange provide information on all accounts that traded at least $20,000 worth of cryptocurrency between 2016 and 2020. Full documentation includes name, tax identification number, physical address, phone number, email addresses, and transaction book.

Court Justifies Decision Against Kraken

According to the judge, the IRS has a legitimate reason for obtaining the information because the amount of trading activity on Kraken far exceeds the taxpayers filing returns related to cryptocurrency investments.

“The Government has a legitimate purpose for seeking the materials described in the subpoena. As discussed above, the subpoena was issued in connection with an IRS investigation to determine the identity and correct federal income tax liability of US individuals who transacted in cryptocurrency during the period 2016-2020.”

In his ruling, Judge Spero quoted an IRS agent, Karen Cincotta, who claimed that Kraken had more than 4 million customers trading more than $140 billion on the platform between 2011 and 2017. However, Cincotta noted that only 288,330 customers have filed official tax returns, a number “dwarfed by the amount of trading activity that occurs on Kraken.”

Payward Ventures Inc., which operates Kraken, one of the world’s third largest exchanges according to various sources, has been a struggling government agency for some time; In addition, it has processed more than 500 million dollars in operations in the last 24 hours.

Last April, a judge rejected the IRS’s demands to review Kraken’s records, though a higher court gave the IRS the green light to continue its investigation.

The judge agreed that Kraken’s underreporting of third-party information contributes to substantially higher underreporting of income.

Meanwhile, the Court rejected the IRS’s demand for information on anti-money laundering investigations, as well as other details in Kraken’s due diligence questionnaires, including users’ net worth, source of income, and employment.

In 2021, the IRS issued a subpoena from John Doe to Kraken, requesting that the exchange provide information about its users. The platform refused to comply with this request, forcing the federal agency to file a court petition.

What Does This Mean for the Crypto Industry?

Although it is not the first time that the IRS requests information from exchange users for tax purposes. The timing of this decision is important as the crypto industry faces various challenges from regulatory authorities in the United States.

Recent rhetoric from US President Joe Biden suggests that the government wants to close all the loopholes, since they could result in low taxes for crypto investors. In a June 28 speech, Biden said his administration would make the tax system fair. It would do so “by removing loopholes for cryptocurrency traders and hedge fund managers.”

By Audy Castaneda

Litecoin Price to Hit $130

Audy Castañeda
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Litecoin Price to Hit $130

The Litecoin price is in a strong uptrend a few weeks before the halving, which will cut miners’ rewards.

During the past few days, the price of Litecoin is placed in the mist of a solid upward trend, being the fourth time that this digital currency has attempted to hold above the key resistance of $100 per unit. According to experts from various portals, if the currency successfully stays above that mark, the next step would be $130. Otherwise, if it goes down to $70 again, the pullback could put it in the $50 range.

One element that generates hope among the holders of this cryptocurrency is the proximity of the halving, an event of the rewards for miners on that network expected to occur in August.

Litecoin Price on Load

The Litecoin price is positioned very close to $105 dollars per unit and generates hope among its holders. In the last seven days, the currency marks a positive streak of 19.79% and could soon maintain the increase.

Although analysts know that the price of the coin will have an upward trend, they do not know the reason for this sudden increase in the last few hours. In one day, the crypto had a growth of close to +25% to reach the current range of the exchange value.

Among the possible factors behind the currency’s recent rise is that the SEC passed over it. Unlike other assets, US regulators did not classify the LTC token as an unregistered security subject to sanctions.

Litecoin emerged as a hard fork of Bitcoin. This implies that the chances of it being classified as a security are remote. For the coin this may be as significant as investors looking at it as an optional asset.

Either way, the Litecoin price remains on a streak that is difficult to gauge in terms of length or length. If the sentiment around it holds up, this is probably a good opportunity to invest in the wait for $130.

Litecoin’s Long-Term Strength

The Litecoin price and market capitalization is a reflection of what was once one of the most influential digital currencies. Its importance plummeted with the rise in popularity of multi-purpose chains such as Ethereum or Cardano.

Before that, the LTC token was considered the silver of cryptocurrencies, assuming that Bitcoin was gold. Investors saw it as an alternative with similar qualities to Bitcoin, but with additional advantages for trading, such as low transaction fees.

In fact, Bitcoin savers, in times of network congestion, used to move their funds in LTC to send them to other wallets. However, the coin’s glory days are over, and attempts to revive it have so far failed to find a way out.

The new situation with the regulators could give a new opportunity to this valuable project, which is one of the oldest digital currencies in the entire market, its launch dating back to 2011.

Since then, the Litecoin Blockchain has worked flawlessly and has never experienced an outage. Surely, these qualities are going to be valued by investors in this new stage. In that sense, in the best of scenarios, the Litecoin price could just be at the beginning of a rally of considerable proportions.

By Audy Castaneda

Ripple Lawyer Predicts a Record Price for Bitcoin and Other Interesting News

Audy Castañeda
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Ripple Lawyer Predicts a Record Price for Bitcoin and Other Interesting News

The week has been an exciting one for cryptocurrency investors, with some shocking news.

The five top news of the week in the world of crypto are presented below:

  • Ripple lawyer predicts a record price for Bitcoin.
  • Arbistar founder, accused of macro-scam with cryptocurrencies, is sent to prison by court order.
  • Switzerland announces the issuance of its own digital currency.
  • BBVA Spain joins the cryptocurrency trend with the investment offer in Bitcoin bonds for its clients.
  • Argentina converts seized cryptocurrencies to pesos.

Ripple Lawyer Predicts Record Price for Bitcoin

John Deaton, Ripple’s lawyer, has made a bold prediction about the price of Bitcoin in the near future. In a recent post on Twitter, he predicted that the price of the world’s largest cryptocurrency could hit $300,000 in the near future.

Deaton’s prediction is based on analysis of previous Bitcoin market cycles. In his view, the cryptocurrency has followed a market cycle pattern in the past, in which the price rises rapidly after a significant drop.

Arbistar Founder, Accused of Macro Scam with Cryptocurrencies, is Sent to Prison by Court Order

Judge José Luis Calama, instructor of the National Court of Spain, has ordered the provisional imprisonment of Santiago Fuentes Jover, founder of Arbistar, an alleged macro pyramidal scam with cryptocurrencies, accused of fraud and of belonging to a criminal organization. The scam affected more than 32,000 investors from various countries, who invested around 1,000 million euros in the platform.

The magistrate considers there is a high risk of escape due to the seriousness of the penalties he faces, up to 18 years in prison, as well as the possibility of accessing the more than 92 million euros allegedly defrauded.

Switzerland Announces Issuance of Its Own Digital Currency

The Swiss National Bank (SNB) has announced that it will issue a wholesale central bank digital currency on the Swiss digital exchange SIX, as part of a pilot project.

According to the president of SNB, Thomas Jordan, this digital currency is real money equivalent to bank reserves, with the aim of testing real transactions with market participants. The pilot project, which will start soon, will have a limited duration.

While the SNB has yet to decide whether to launch a retail CBDC, Jordan stated that they do not exclude the possibility of introducing them in the future.

BBVA Spain Joins the Cryptocurrency Trend with the Offer of Investment in Bitcoin Bonds for its Clients

BBVA Spain has incorporated the Fidelity Physical Bitcoin ETN bond into its product offering. The bond, issued by the asset manager Fidelity, is registered with the National Securities Market Commission and allows BBVA customers in Spain to invest in Bitcoin through the bank’s App and website.

BBVA customers in the European Union and Latin America can exchange Bitcoin through the bank’s Swiss subsidiary.

Argentina Converts Seized Cryptocurrencies to Pesos

The Specialized Fiscal Unit for the Investigation of Cybercrimes of the Department of San Isidro in Argentina, seized $5,000 in cryptocurrencies from a 28-year-old hacker, specialized in SIM exchange to steal funds.

This is the first criminally-derived cryptocurrency seizure in Argentina, and seized funds in Bitcoin, USDT, Bit Torrent, Kava and Cardano will be converted into Argentine pesos.

The Prosecutor’s Office did not specify why the funds will not be returned to the victims of the robbery through SIM-swapping.

By Audy Castaneda

Bitcoin’s Next Halving

Marina Meza
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Bitcoin’s Next Halving

A Bitcoin halving takes place roughly every four years, with the next one taking place in 2024.

The Bitcoin protocol is designed to halve every exactly 210,000 blocks. Since it usually takes about 10 minutes to mine a new block, around 144 are being mined per day, or more than 4,300 per month.

It is currently just under 800,000 blocks mined, so another 40,000 are still required to get to the next one. In less than ten months, block number 840,000 should be reached, which will trigger the fourth halving.

Estimated Date of the Next Bitcoin Halving

Actually, 10 minutes don’t always go by between blocks. Mining a block means randomly searching for an alphanumeric string, called a hash, that validates it, and this search has unpredictable times, since it is done randomly.

However, it is possible to ensure that more or less, on average, it takes about 10 minutes to find it, and this causes the so-called block-time to always stay close to 10 minutes.

For example, in May it was almost always slightly below this threshold, while in June it was often slightly above it. In early 2023, though, the block time was almost always less than 10 minutes, and this slightly shortened the estimate for the next halving date.

The above means that the estimate of the date of the next halving is not precise, even knowing with certainty that it will take place precisely in block number 840,000.

Based on these estimates, block 840,000 should be mined between April and May 2024, perhaps late April or early May, when the fourth halving would be triggered.

Bitcoin: Previous Halvings and Expectation of the Next one in 2024

Although the first block was mined on January 3, 2009, the 210,000th block that triggered the first halving was mined on November 28, 2012, or 1,425 days later, or just under 3 years and 11 months.

The second cycle saw an even lower block time, because block 420,000 was mined on July 9, 2016, exactly 1,319 days later, which corresponds to just over three years and seven months.

Even during the third cycle, the overall average block time was less than 10 minutes, so much so that block 630,000 was mined on May 11, 2020, after exactly 1,402 days (just under three years and 10 months).

It is possible that it will take less than the theoretical 1,458 days this time as well, so it is almost certain that block 840,000 will be mined before May 11, 2024.

Price Impact

The halving itself does not have a direct impact on the price of Bitcoin. However, it does reduce the selling pressure on the miners, and this usually reduces the selling pressure a bit overall as well.

This was more evident in the past, when a lot of BTC was mined, but as the impact subsides, it becomes less and less. So far all three halves have been followed by an actual speculative bubble, which inflated the following year (2013, 2017, and 2021).

The bubble always bursts the following year, but in no case did the BTC price fall below the previous halving value after the bubble burst. The 2022 low was $15,500, or just under double the May 2020 price.

By Marina Meza

New Zealand Highlights the Need to Balance Innovation and Regulation in the Cryptocurrency Market

Audy Castañeda
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New Zealand Highlights the Need to Balance Innovation and Regulation in the Cryptocurrency Market

The Reserve Bank of New Zealand (RBNZ) calls for a global alignment in the regulation of cryptocurrencies and stablecoins.

The Reserve Bank of New Zealand (RBNZ) has clarified its stance on cryptocurrencies and stablecoins in a statement published on Friday, June 30. In it, the RBNZ recognized both the significant risks and opportunities presented by these private finance innovations.

As reported by a digital channel on Telegram, Ian Woolford, who serves as Director of Money and Cash at the Reserve Bank of New Zealand, said in a statement issued on June 30 that, from the perspective of the RBNZ, “it is not necessary to implement a regulatory approach at present”. However, he stressed the need to “increase vigilance.”

In a statement via Twitter last February, Ian Woolford, the Bank’s Director of Money and Cash, noted that “new forms of money such as crypto and stablecoins create opportunities and risks for New Zealanders and the financial system.” In addition, he stressed that there is considerable uncertainty about how the industry will evolve.

However, Woolford also pointed out the need to find an optimal balance between innovation and regulation that allows the market to evolve.

New Zealand Prioritizes Strict Monitoring of Cryptocurrencies and Stablecoins

Specifically, the RBNZ statement comes days after it was revealed that a New Zealand-based travel company, We Are Bamboo, lost $2 million in cryptocurrency trading using customer funds earmarked for prepaid travel negotiated through multiple platforms.

The RBNZ agrees that while a regulatory approach may not be necessary at this time, increased oversight is key. Where one of the highlights of the presentations is the need for advanced data and monitoring to build a comprehensive understanding of private money. However, the RBNZ supports the alignment of regulatory approaches between agencies and jurisdictions.

The statement further notes the following:

“The submissions reinforce our view that there are significant risks and opportunities from stablecoins and other private money innovations, but also significant uncertainties about how the sector will develop and where the optimal balance will lie. We agree that caution is needed, which also reinforces the need for enhanced data and monitoring to build understanding.”

Woolford also pointed out that global harmonization is key to ensuring effective regulation, and that the RBNZ will continue to work with other agencies, particularly through the Council of Financial Regulators, to support healthy growth in the financial ecosystem, as well as continue engaging with industry and other stakeholders on issues as they arise.

The United States Leads Law Enforcement Actions Against Cryptocurrencies, While New Zealand Focuses on Preventing Illicit Activities

The RBNZ statement underscores the caveat that the global regulatory regime is changing globally. In this sense, the United States has been at the center of police actions against cryptocurrencies, while New Zealand has implemented stricter regulations that focus on FATF AML measures and KYC rules to prevent illicit activities and protect consumers.

However, it has been noted that the current rules have not contributed to long-term stability and legitimacy in the cryptocurrency market in many jurisdictions.

In closing, the RBNZ’s stance on cryptocurrencies and stablecoins highlights the need for an optimal balance between innovation and regulation, and the importance of increased oversight in an ever-evolving market.

By Audy Castaneda

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