Will the SEC Also Look at Cardano Soon?

Audy Castañeda
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<strong>Will the SEC Also Look at Cardano Soon?</strong>

Cardano is in danger of being heavily regulated. How could this affect the price of ADA?

Ripple’s legal dispute with the SEC ensures that the price of XRP has never risen as strongly as it did in 2018. More recently, the SEC also imposed sanctions on a cryptocurrency exchange like Coinbase. Now Cardano could also come under fire from the US Securities and Exchange Commission.

The US Securities and Exchange Commission is responsible for regulating securities trading in the US. For a long time, cryptocurrency trading was poorly regulated. Many of the early investors were able to benefit from massive gains, but others also lost a lot of money. In the last 2-3 years, what is probably the most important regulatory authority in the world has been taking more intense action against cryptocurrencies.

The focus is mainly on the XRP coin. It is issued centrally by Ripple Labs and can be used for payment transactions between banks. Since Ripple centrally issues and manages this coin, there was the highest suspicion from the beginning that it was a security.

Securities in US trading are subject to precise regulations that Ripple has not adhered to so far. This is the subject of a lawsuit that has been in a limbo for over 2 years.

Will the SEC Take Action Against Cardano Soon?

A guilty verdict against Ripple could change a lot in the crypto market. Suddenly, other altcoins would be suspected of counting as securities as well. In principle, this is already the case, and the SEC is showing with tough measures, including against Coinbase, how serious they are about regulating cryptocurrencies.

Cardano could also be affected. The network is considered one of the biggest hopes in the crypto market. The recent crackdown on the SEC, however, has made many investors sit up and take notice. Venture capitalist Dan Gambardello says Cardano or its ADA token is not under SEC jurisdiction, as the ICO took place in Japan.

According to Gambardello, ADA is likely not considered a security. 2 simple reasons. First, Cardano ICO was in Japan, not available to US investors. Second, a judge recently ruled in the LBRY case that the secondary sales of $LBC tokens were not securities, which sets an important precedent for things like $ADA.

Can the SEC Implode the Cardano Course?

Tighter regulation of cryptocurrencies, at least altcoins, seems inevitable. Therefore, the networks and also the investors have to adapt to it. Despite its ICO in Japan, Cardano is also threatened with stricter regulation by the SEC, which would mainly affect trade in the United States.

Cardano’s course could suffer with the corresponding news. However, the regulation should not cause serious damage to Cardano’s course. The project has too many enthusiastic fans and is too long-term for that. Still, watch out for the SEC’s next steps.

By Audy Castaneda

What Is Chapter 11 of the US Bankruptcy Code?

Audy Castañeda
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<strong>What Is Chapter 11 of the US Bankruptcy Code?</strong>

Chapter 11 bankruptcy is often called a reorganizational bankruptcy because the debtor generally continues to manage the business, has the powers and responsibilities of a trustee, and is able to operate.

After the collapse of the Terra ecosystem, a wave of bankruptcies swept through the cryptocurrency market. Celsius Network, Three Arrows Capital, Voyager Digital, FTX and several other major players have filed for bankruptcy.

Many of these companies go through the corresponding procedure in the United States, where filing for bankruptcy under Chapter 11 allows the company to reorganize and pay off debts owed to creditors.

Basically, the same people continue to control the business as before the bankruptcy. However, in special cases (for example, those involving fraud or gross incompetence), a court-appointed receiver steps in and performs these functions throughout the process.

To successfully complete the procedure, the company needs to draw up a reorganization plan. In this case, creditors can vote in favor of the document. If it receives the required number of votes and meets certain legal requirements, the court will approve it.

Exclusively for ForkLog, lawyers from GMT Legal discussed the advantages and disadvantages of the above approach, its differences from alternative models, as well as potential issues that cryptocurrency companies may face in this process.

What Are the Pros and Cons of the Procedure for the Applicant and Creditors?

Among the benefits of Chapter 11 bankruptcy, the attorneys at GMT Legal include maintaining control over the companies and the ability to continue doing business. This allows for a more complete repayment of funds to interested parties.

Among the shortcomings of the process, the experts identified long periods – of up to several years – and high cost. They noted that the proceeding is one of the most expensive types of bankruptcies due to attorneys’ legal fees.

GMT Legal noted that the court can dismiss a Chapter 11 case for a variety of reasons. The lawyers stressed that the court can dismiss the case only if there are good reasons and after giving notice and an opportunity for a hearing to all interested parties.

In order to successfully complete the bankruptcy proceeding, the debtor must provide a plan of reorganization that, among other things, indicates the value of its assets and liabilities.

In the case of cryptocurrency companies, difficulties can arise, since the funds on their balance sheet are difficult to identify and evaluate.

What are the Alternatives?

According to experts, the most popular alternatives to this procedure are filing under Chapter 7 of the US Bankruptcy Code, as well as selling assets outside of bankruptcy and debt restructuring.

Thus, the Chapter 7 bankruptcy proceeding involves the liquidation of a company with the payment of debts. The lawyers stressed that, in this case, the company ceases its activities and creditors receive only a small part of the due payments.

By Audy Castaneda

SEC Sues Terraform Labs and Do Kwon for Multi-Million Dollar Fraud

Audy Castañeda
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<strong>SEC Sues Terraform Labs and Do Kwon for Multi-Million Dollar Fraud</strong>

The SEC’s latest lawsuit further demonstrates its toughness on the cryptocurrency industry, as it fined Kraken for cryptocurrency staking services and questioned the issuance of the Binance USD (BUSD) stablecoin.

The United States Securities and Exchange Commission (SEC) formally accused Do Kwon and Terraform Labs (TFL), the company he co-founded, of running a fraudulent scheme involving the native Terra token (LUNA), as well as the algorithmic stablecoin TerraUSD (UST), which ultimately suffered a failure.

On February 16, the SEC filed a lawsuit in US federal court, alleging that TFL and Do Kwon offered and sold unregistered securities, including stablecoins, in addition to carrying out a scheme that wiped out at least $40 billion in market value for cryptocurrency.

This is considered to cause losses for retail and institutional investors in the United States.

TFL and Do Kwon were also accused of misleading investors, including by making false statements about a relationship with a popular South Korean mobile payment app called Chai, as well as promoting the stability of the UST stablecoin, which they claim it can hold its price 1-to-1 against the US dollar (USD).

Did the UST Fail in 2021?

The SEC’s lawsuit says the 2022 tragedy was not the first time UST had de-linked — that is, lost its benchmark on its underlying assets.

A year earlier, in May 2021, the value of the stablecoin had fallen below $1. This prompted TFL and Do Kwon to ask a secret third party to step in and buy in bulk to increase its value.

The recovery of UST prices to their parity with the US dollar, touted as a ‘decentralization victory’, led to an influx of money from investors.

In this regard, SEC Chairman Gary Gensler said he has accused TFL and Do Kwon of failing to provide the full, fair and honest public disclosure required for a number of crypto asset securities, notably the LUNA token and the UST stablecoin.

“We also charge them with fraud by repeating false and misleading statements to build trust before causing huge losses to investors,” Gensler added.

Target Investment Practices in the Terra Ecosystem

The SEC noted that from April 2018 to May 2022, TFL and Do Kwon raised billions of US dollars from investors by offering and selling a number of linked crypto asset securities. The SEC claims that many of these are in unregistered transactions.

In addition to the LUNA token and the UST stablecoin, the SEC also highlighted massive assets that are valued as exchange-based securities (securities) designed to pay returns (or gains) by investing in assets that mirror the prices of shares of several American companies. like Tesla to Amazon.

The cases involving TFL and Do Kwon mark a significant escalation in the US regulator’s crackdown on the crypto industry.

By Audy Castaneda

XRP Returns to $0.40 as SEC vs. Ripple Case Takes a New Twist

Audy Castañeda
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<strong>XRP Returns to $0.40 as SEC vs. Ripple Case Takes a New Twist</strong>

On Wednesday, XRP joined the broader market in the green, rallying 4.95% to end the day at $0.40119. Regulatory risk easing, support from US lawmakers, as well as SEC vs. Ripple updates, led to a bullish session.

On Wednesday, XRP rose 4.95%. Following a 3.13% gain on Tuesday, XRP ended the day at $0.40119. XRP closed the day at $0.40 for the first time since February 7.

A bearish start to the day saw XRP drop to an early morning low of $0.37675. Pulling away from the first major support level (S1) at $0.3702, XRP rallied to a late high of $0.40236. XRP broke above the first major resistance level (R1) at $0.3890 and the second major resistance level (R2) at $0.3958 to end the day at $0.40119.

US Lawmakers Raise Question Marks over Gensler’s Tactics

Updates on the SEC versus Ripple case generated interest on Wednesday. Defense attorney James Filan shared the last statement, as follows:

“Dr Roslyn Layton, PhD. has filed an Intervention Motion to ask the Court for access to the Hinman Speech Papers.”

As in the case of Empower Oversight v SEC, the filing highlighted potential conflicts of interest, because Hinman had a financial stake in promoting Ethereum over competing coins like XRP.

Former SEC Division of Corporate Finance head William Hinman has said that Bitcoin (BTC) and Ethereum (ETH) are not securities. The contentious issue with the speech related to Hinman’s connection to Simpson Thacher, who is part of a group promoting Enterprise Ethereum. After leaving the SEC, Hinman returned to Simpson Thacher.

Prior to the filing of the SEC’s summary judgment response brief, the SEC had made at least six attempts to protect the documents under attorney-client privilege. Speaking from Davos in January, Ripple CEO Brad Garlinghouse shared his views on the documents related to the speech, saying the following:

“When they come out, I think you’ll see more things like, how could the SEC possibly decide to bring a case against Ripple, given what they were saying inside their own walls?”

XRP Price Action – Technical Indicators

XRP needs to avoid a drop through the $0.3934 pivot to target the first major resistance level (R1) at $0.4101. A move through the morning high of $0.40447 would indicate a bullish session. However, the broader crypto market and SEC v Ripple talk would need to support a breakout.

A fall through the pivot would bring the first major support level (S1) into play at $0.3845. However, barring a widespread crypto extended selloff, XRP should avoid levels below $0.38 and the second major support level (S2) at $0.3678. The third major support level (S3) sits at $0.3422.

A bearish cross of the 50 day EMA through the 200 and 100 day EMAs would support a break of R1 ($0.4101) to target R2 ($0.4190) and $0.4250. However, a drop to the 100-day EMA ($0.39042) and 200-day EMA ($0.39023) would bring the 50-day EMA ($0.38574) and S1 ($0.3845) into play. A drop through the 50 day EMA would send a bearish signal.

By Audy Castaneda

ADA: Bulls Need a Return to $0.420 to Target $0.450

Audy Castañeda
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0
<strong>ADA: Bulls Need a Return to $0.420 to Target $0.450</strong>

ADA rose 8.27% on Wednesday, to end the day at $0.419. Regulatory risk easing, favorable talk from US lawmakers, as well as US economic indicators, led to a working session. Technical indicators are bullish, putting $0.450 into play.

ADA rose 8.27% on Wednesday. Following a 7.80% gain on Tuesday, ADA ended the day at $0.419. ADA reached $0.420 for the first time since November 6.

A mixed start to the day saw ADA fall to an early morning low of $0.382. Pulling away from the first major support level (S1) at $0.364, ADA rallied to a last hour high of $0.420. ADA broke above the first major resistance level (R1) at $0.402 and the second major resistance level (R2) at $0.416, to end the day at $0.419.

Input Output HK Silence Leaves the ADA in the Hands of US Lawmakers

There were no updates from Input Output (HK) (IOHK) on Wednesday to provide guidance. The lack of IOHK updates after Tuesday’s Valentine update left ADA in the hands of the broader crypto market.

The SEC, on the other hand, proposed amendments to its custody rules to incorporate cryptocurrencies on Wednesday. In addition to the custody rules, the changes would also include amendments related to reporting, bookkeeping, as well as investment adviser registration obligations.

Activity on Capitol Hill also drew attention, with lawmakers reintroducing a bill to make it easier to invest in cryptocurrency in retirement accounts. Former House Speaker Nancy Pelosi tweeted that “Sen. Tuberfille (R) plans to reintroduce the “Financial Freedoms Law”. She further added that “their goal is to prevent the Department of Labor from restricting people from investing their 401ks in crypto. All Americans should have the right to invest their retirement money as they see fit.”

The change in tone followed scrutiny of the SEC by US lawmakers on Tuesday. The Senate Banking Committee held a hearing, “Crypto Crash: Why Financial System Safeguards Are Needed for Digital Assets.” Questions about Gary Gensler and SEC regulation through enforcement, and the SEC’s lack of guidance for crypto companies, highlighted the failures of Gensler and the SEC.

It remains to be seen whether the SEC will seek to introduce regulations, or return to regulation by application. However, the increased scrutiny of US lawmakers on the SEC’s actions is positive for the crypto market.

ADA Price Action – Technical Indicators

ADA needs to avoid a drop through the $0.407 pivot to target the first major resistance level (R1) at $0.432. A move through the morning high of $0.421 would support a bullish session. However, updates to the Cardano network and the broader crypto market should provide support.

ADA broke above the 50 day EMA, currently at $0.380. After the bullish crossover on Wednesday, the 50 day EMA turned away from the 100 day EMA, and the 100 day EMA broke out from the 200 day EMA, providing bullish signals.

A hold above S1 ($0.394) and the 50-day EMA ($0.380) would support a break of R1 ($0.432) to the target of R2 ($0.445) and $0.450. However, a drop-through S1 ($0.394) and the 50-day ($0.380) and 100-day EMAs ($0.378) would give the bears a run to S2 ($0.369) and the 200-day EMA ($0.366). A drop through the 50 day EMA would send a bearish signal.

By Audy Castaneda

Venture Capitalist Mike Novogratz Predicts $30K Bitcoin this Quarter

Audy Castañeda
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0
Venture Capitalist Mike Novogratz Predicts $30K Bitcoin this Quarter

The founder and CEO of Galaxy Digital said he expects Bitcoin prices to hit $30,000 by the end of March.

Speaking at a Bank of America conference on February 15, Novogratz had this to say:

“When I look at the price action, when I look at the caller excitement, the FOMO buildup, I wouldn’t be surprised if we were at $30,000 at the end of the quarter. And I would have given both my shoes for that to be true just six weeks ago,” he continued before adding, “like if we end the year $30,000, I’ll be the happiest guy.”

Bitcoin has seen its biggest daily gain in over a month, rising 12% in the last 24 hours.

Bloomberg Crypto quoted Novogratz as stating that he would not be surprised “if we were at $30,000 at the end of the quarter.”

Bitcoin to $500K in Five Years

To hit Novogratz’s price prediction, BTC only needs to rise 21.5% more from current levels.

The venture capitalist has been bullish on the king of cryptocurrencies before, with an outlandish forecast that prices would hit $500,000 for one BTC by 2024. He still sees the asset reaching that level, just not in the next five years.

He blamed the Federal Reserve’s interest rate hikes for the extended forecast.

“The thing that makes me skeptical that this year we can have explosive highs and back to old is Chairman Powell,” Novogratz said, before adding that “he’s really doing what he says he’s going to do, and I don’t see the Fed turning and cutting in the short term”.

Higher interest rates make cash a more attractive investment for passive income. Additionally, the threat of a recession still looms, which means less disposable income to spend on high-risk assets like cryptocurrencies.

BTC’s latest big move has improved market confidence amid Uncle Sam’s regulatory war against cryptocurrencies. The Bitcoin Fear and Greed Index is currently registering a 62, which is firmly in greed territory.

BTC Price Pumps

BTC prices have risen an epic 11.8% on the day to reach $24,711, according to CoinGecko. The asset is now trading at an eight-month high, reaching a price level not seen since mid-June. It also wiped out all losses in the February dip, breaking above levels before the FTX crash.

Analysts note that there is not much resistance between $25K and $30K, adding that Ethereum could also revisit $2,000 soon if the momentum continues.

Satoshi Flipper tweeted that “there isn’t that much resistance between 25 and 30k from where I’m looking at things. The bulls still feel like it, it feels. You also have to believe $ETH 2k is just around the corner.”

By Audy Castaneda

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