Report revealed that the Australian regulator continued to flag concerns regarding FTX’s license and issued multiple notices to provide transparent documents.
The behemoth crypto exchange’s collapse has delivered shockwaves all over the crypto space, plunging the global market cap from $1 trillion. FTX’s downfall was a cautionary tale for those in the cryptocurrency space, as the company’s meteoric rise had masked the underlying problems that eventually led to its downfall. Recently, a report revealed that Australian regulators were on high alert as they closely monitored the actions of cryptocurrency platform FTX six months before its unfortunate collapse. The authorities were determined to protect consumers and safeguard against any potential missteps, and their concerns about the company’s local operations had reached a boiling point.
The impact of news and announcements on the cryptocurrency market
The crypto market has been volatile this year and it appears that the recent surge in its price is not sustainable. The demand for cryptocurrencies has increased substantially over the past few months, but there is no shortage of worthy projects on offer. This begs the question: how much can a single announcement really impact a market that has experienced booming prices over such a short period of time? We’ll explore this topic in detail here.
The crypto market is highly susceptible to news, whether good or bad.
News can have a significant impact on the price of cryptocurrencies and can also have a substantial effect on their liquidity, as well as other factors that impact their value.
News often refers to updates in cryptocurrency markets or information about developments in the wider world such as regulatory changes or updates from governments around the globe.
Google Trends shows a strong correlation between the search term ‘bitcoin’ and the price of bitcoin.
Google Trends is a tool that measures the volume of search traffic over time. The more people are searching for “bitcoin,” the more likely they are to buy it or sell it and thus affect its price. This effect is even stronger when you factor in news or announcements since these can be used by investors as signals that indicate future market movements.
We have already seen the effect of the news on bitcoin’s price in past.
- Bitcoin’s price rose after the SEC announced that it would not be approving a bitcoin ETF, a move which sparked fears of an impending crackdown by regulators. The cryptocurrency has since fallen back to its former levels but has still risen substantially over the last year due to increased demand from institutional investors, who see it as an alternative investment vehicle (and also because they believe in its potential).
- The SEC also delayed its decision on a bitcoin ETF until September or October 2020—a delay which has caused concern among some investors but could also generate more interest if rumors swirl around that there may be another delay coming soon (as happened after last year’s postponement).
The impact of big announcements can be amplified if they are unexpected or shrouded in secrecy.
News and announcements can have a big impact on the cryptocurrency market. The impact is more pronounced when they’re unexpected, or if there is some kind of mystery surrounding them.
For example, when Facebook announced its crypto ambitions in March 2018, it was one of the biggest news stories in the world at that time. This caused many people who had missed out on buying Bitcoin during its 2017 bull run to jump on board with their favorite coins—and others who were already holding onto their holdings saw those values skyrocket overnight!
If you’re looking for an example of how big announcements can affect your investments (or anything else), just think back to last year’s Major League Baseball All-Star Game being played at Dodger Stadium instead of San Diego’s Petco Park due to severe weather conditions affecting travel plans between southern California cities…
Crypto news sources can contribute to volatility by spreading rumors.
A cryptocurrency market is a volatile place, and this volatility can be attributed to the fact that much of the information about it is spread by unreliable sources. For example, if you’re looking for news about Bitcoin or other cryptocurrencies on your local news channel, you might not know whether or not it’s legitimate because there are no guarantees that these sources are reliable.
The same goes for most crypto blogs and social media platforms—they’re often full of unverified rumors that originate from people who have ulterior motives or financial incentives in mind (for example: creating FUD). This can lead investors to make decisions based on incorrect information instead of sound reasoning from experts in the field like us at [our company name].
It would take more than just a positive news story to turn around the performance of the crypto market this year
If you’re looking for reasons why the cryptocurrency market has been so difficult to predict, it’s not because of a shortage of news stories.
In fact, the opposite is true: there have been plenty of positive developments in recent months that could help stabilize prices and make them more predictable. But even with all those potential catalysts present and accounted for—a stable U.S.-China trade deal; an interest rate hike by the Fed; a new leader at Facebook; regulatory changes coming from Europe or China—the market remains volatile on a daily basis.
The reason? Cryptocurrency investors remain highly susceptible to global events that have little impact on their holdings but could cause big swings in price if they were able to move quickly enough before other players took advantage of them (or before those same players realized how badly they’d been duped).
Conclusion
The crypto market is a volatile one and news has played a key role in its evolution. With this in mind, we can expect to see more volatility as the year unfolds. While there have been some positive announcements that have contributed to this market’s growth, we also need to be aware of how these developments could lead us down an unexpected path. This can be demonstrated by how rumors spread through social media or even how Google Trends shows an increase in searches for certain terms such as ‘bitcoin’ versus others like ‘futures’. It will take more than just one good news story or announcement from an established brand such as Apple or Facebook, however; rather it will take together greater efforts from many different companies working together towards their shared goal of mainstream adoption of crypto technology.’ learn more at biti codes.
Australian Regulators’ Stealth Surveillance On FTX
Australia’s financial watchdog sounded the alarm as early as six months before cryptocurrency platform FTX met its unfortunate demise in November. The regulator had raised red flags over the company’s local Australian subsidiary, sensing that something was amiss.
Cryptocurrency may not yet be regulated in Australia, but that didn’t stop FTX from setting up its business in the country with an Australian financial services license (AFSL). The company had obtained the permit through a strategic acquisition, giving it the legal backing to operate in the market. However, the license was canceled by the Australian Securities and Investments Commission (ASIC) when FTX went into administration.
Newly obtained documents reveal a dramatic turn of events for cryptocurrency platform FTX, as the regulator issued a Sect 912C notice just one month into the company’s operations. The notice was a clear sign that the authorities were closely watching the company and required FTX to provide critical information about its operations for assessment. Furthermore, the regulator’s decision to issue the notice was a testament to their commitment to ensuring that companies operating in the cryptocurrency market were meeting the conditions of their Australian financial services license (AFSL).
ASIC Continued To Flag Concerns On FTX’s License
In the months leading up to FTX’s eventual collapse, the Australian Securities and Investments Commission (ASIC) was on high alert, issuing a total of three notices to the cryptocurrency platform. However, despite ASIC’s concerns and their relentless pursuit of information, the details of the notices remained shrouded in mystery as the notices were not included in the Freedom of Information (FOI) response, and ASIC refused to release FTX’s responses to the notices, citing concerns that it could prejudice their law enforcement activities related to market misconduct.
Moreover, a manager at the Australian Securities and Investments Commission (ASIC), tasked with overseeing the market conduct division, was eager to get a closer look at the business proofs FTX had provided as part of their license application. However, as the investigation progressed, staff soon realized that they were facing a major roadblock.
It turned out that FTX had secured their Australian financial services license (AFSL) through a strategic takeover, meaning that the critical business proofs they had provided to ASIC were no longer available for review. Regarding this, an investment protection officer said, “Given the concerns, I think the best course of action at this stage is an s912C Notice. I think we ask them all of the normal questions when there has been a change in control.”
An ASIC spokesperson said, “Since March 2022, Asic had made enquiries with FTX Australia about the financial products offered by FTX Australia. The issues raised included pricing, FTX Australia’s compliance with ASIC’s [contract for differences] product intervention order, and its on-boarding of clients.
When FTX faced its downfall, KordaMentha, the company’s local administrator, stepped in with a mission to return funds to creditors. However, as the situation unfolded, it became clear that not all of FTX’s Australian-based customers would receive the same level of support. Surprisingly, some Australian customers were faced with the prospect of dealing with administrators in the United States to recover their funds. This added an extra layer of complexity and uncertainty to an already difficult situation.
