• Folkvang, a Cayman Island-based trading firm, experienced a major blow due to the collapse of FTX exchange in November 2021.
• The firm had half of its equity parked on FTX and it managed as much as $400 million in 2021.
• Despite the loss, founder Mike van Rossum is happy that they are still standing.
FinanceAlameda-Backed Crypto Trader Folkvang
Folkvang is a market-neutral crypto trading firm based in the Cayman Islands that was founded in January 2020 by a team of seasoned crypto quant traders. The firm managed as much as $400 million in 2021 and had half of its equity parked on FTX before it collapsed. Founder Mike van Rossum revealed that their equity was halved after the crash, but they are still standing despite suffering a major blow during November’s crash.
Alameda Research Investment
Folkvang’s emergence on FTX was expected after Alameda Research—the trading firm that played a central role in FTX’s demise—invested in Folkvang and Folkvang returned the favor by investing in FTX (Sam Bankman-Fried owned both FTX and Alameda.)
FTX Collapse Aftermath
In an interview with CoinDesk, van Rossum gave an account of the messy situation following the collapse of FTX exchange. He said that it was “a tough pill to swallow” and that they had to pay back lenders out of pocket since they were active borrowers. At its peak in 2021, Folkvang managed around $400 million worth of assets including equity and loans.
Survival Despite Losses
Van Rossum recognized that this is all part of the game when it comes to such risky investments, and he’s glad that his company is still standing despite losses from the crash. During one single trade day, Folkvang did up to $8 billion worth of volume which goes to show how successful they were prior to this incident.
Crypto Industry Still Reeling
More than three months later since this crash happened, the cryptocurrency industry is still feeling repercussions from what happened with FTX exchange. It serves as an important reminder for investors who want to get involved with cryptocurrencies—to be aware of these risks associated with them because no one can predict what will happen next or how far losses may go if something similar happens again in the future.
• TrueFi’s TRU token surged over 200% after Binance minted $50 million of TUSD stablecoin.
• Speculation was sparked that TUSD could gain a larger role in trading on Binance after the crackdown on the Paxos-issued BUSD.
• The issuers of TrueUSD and TRU have been separated since 2020, and TrustToken (now Archblock) transferred all its assets to TrueFi Foundation.
TRU Token Rallies Over 200% After Binance’s TUSD Mint Sparks Speculation
The rally appears to come from traders mistakenly connecting TRU with TUSD, a stablecoin that had been issued by TrueFi in the past but now no longer is. By Krisztian SandorFeb 16, 2023 at 6:03 p.m. UTCUpdated Feb 16, 2023 at 7:24 p.m. UTC
TRU, the governance token of decentralized lending protocol TrueFi, surged 220% on Thursday in an hour, data by CoinMarketCap shows, in a speculative flurry over a Binance stablecoin transaction. Before the rally took off, Binance minted $50 million of TrueUSD (TUSD) stablecoin according to blockchain data.
The event sparked speculation among crypto traders about TUSD potentially gaining a larger role in trading on Binance after the regulatory crackdown on the Paxos-issued BUSD. This speculation seems to be misplaced however as TrustToken sold TUSD in 2020 to Techteryx and then renamed itself Archblock last year when it separated from TrueFi protocol and began decentralizing the platform.
TRU surged as high as 14.6 cents from 4.4 cents on Binance before later paring some of the gains and trading at around 11 cents at press time..
B USD Drama Sets Stage for Stablecoin Market Reshuffling showed us that despite misconnections between tokens related to their issuers still happen there are steps being taken towards more regulation within this space so that these mixups can be avoided or eliminated altogether soon enough!
• Kraken is in the process of settling with the US Securities and Exchange Commission (SEC) over charges that it offered unregistered securities.
• Kraken will immediately shut down its cryptocurrency staking-as-a-service platform for US customers and pay $30 million to settle SEC charges.
• The SEC voted on the settlement during a closed-door commissioner meeting on Thursday afternoon.
Kraken Agrees to Shutter US Crypto-Staking Operations
Crypto exchange Kraken has agreed to “immediately” end its crypto staking-as-a-service platform for U.S. customers and pay $30 million to settle Securities and Exchange Commission (SEC) charges it offered unregistered securities, the U.S. agency announced Thursday.
Details of the Settlement
The SEC confirmed Kraken would shut down its staking services for U.S. customers after the publication of this article, following a vote by commissioners in a closed session on Thursday afternoon. Kraken’s staking service had promised up to 24% yield, and sent customers staking rewards twice per week according to its website.
Implications for Crypto Regulation
The settlement signals increased regulatory scrutiny of crypto exchanges offering tokenized assets, which could have implications for other platforms offering similar services in the future. It also provides further evidence that regulators are willing to take action against companies operating outside their jurisdiction if they offer services related to digital assets in some way or another, regardless of whether those activities involve traditional financial products or not.
The news comes one day after Coinbase CEO Brian Armstrong revealed that his company was negotiating with both federal and state authorities over potential violations of securities law related to certain tokens listed on Coinbase Pro and Prime trading platforms during 2017–18 period, including Ethereum Classic (ETC), Zcash (ZEC) and XRP (XRP). The SEC has yet to comment publicly on these negotiations as well as any potential penalties Coinbase may face if found guilty of breaking securities laws at any point during this period.
This settlement serves as an important reminder that all companies involved in digital asset trading should remain vigilant when it comes to complying with federal regulations governing such activities, even if they operate outside U.S borders or cater primarily towards non-US customers – failure to do so can result in significant fines or other legal action from regulators domestically or abroad.
• Coinbase (COIN) stocks jumped 20% after the Fed’s rate hike and Jerome Powell’s remarks on fighting inflation.
• The crypto exchange also won a dismissal of a proposed class-action lawsuit by customers.
• Other crypto-related stocks like MicroStrategy (MSTR) and Silvergate Capital (SI) have also been rallying this year.
Coinbase Shares Soar
Coinbase (COIN) shares soared more than 20% on Thursday after the Federal Reserve’s latest interest rate hike decision and Fed Chair Jerome Powell’s remarks on progress in fighting the high rate of inflation.
Proposed Class-Action Lawsuit Dismissed
The US-based crypto exchange also got a boost after it won a dismissal on Wednesday of a proposed class-action lawsuit by customers who claimed Coinbase sold them unregistered securities.
Stock Price Correlated with Bitcoin
The company’s stock is up more than 100% this year as the crypto industry started recovering from the FTX exchange’s collapse. This is because Coinbase makes most of its revenue from trading volume, so its stock price is highly correlated with bitcoin (BTC), which has been rallying so far this year.
Barclays: Volumes Rose 56% in January
U.K bank Barclays said in a note on Thursday that Coinbase volumes rose 56% in January from the previous month, and that “volumes are now near levels seen in October before the collapse of FTX, but remain below the average for 2022.”
Crypto-Linked Stocks Rallying
Other crypto-linked stocks like MicroStrategy (MSTR) and Silvergate Capital (SI) have also been rallying this year, along with broader equity markets. Edward Moya, senior market analyst for foreign exchange market maker OANDA noted that “we might be getting six more weeks of winter, but it doesn’t seem like we will be seeing an ice age in crypto.”