In 2022, the cryptocurrency sector is suffering difficult times: cryptozyma appeared in the summer, bitcoin fell to multi-year lows, and overseas exchanges cease dealing with Russians one by one. At the same time, Russia intends to enact a mining legislation and prohibit the circulation of cryptocurrencies. Read about all of this in today’s review.
The failure of the FTX exchange wrecked havoc on the bitcoin market.
The collapse of the cryptocurrency market in November, precipitated by the liquidity crisis of the exchange FTX, also wreaked havoc in the poker world, with players claiming massive losses and drawing comparisons to online poker scandals of the “zero years.”
Early in November, an investigation by CoinDesk found that the majority of the assets of FTX-affiliated brokerage Alameda Research ($14.6 billion) are neither fiat currencies or well-secured stablecoins, but rather FTT tokens produced by the exchange itself. Sam Bankman-Fried, the major owner of both companies (shown on the cover of this piece), was really borrowing from himself and defrauding the market.
After word spread, major players started to dispose their FTT coins, with Binance alone selling $500 million. By November 8, withdrawals from the cryptocurrency exchange had topped $6 billion, and the FTT token had lost 80% of its value since the start of the month. Soon afterwards, FTX ceased withdrawals and filed for bankruptcy. In this context, bitcoin reached a two-year low and dropped below $16,000.
Ten years ago, the Full Tilt Poker room filed for bankruptcy. Poker players relate this narrative to that event. The poker club did not maintain player bankrolls separate from its own finances, it lavished money on a full staff of ambassadors, and after Black Friday it was unable to pay back players.
Interestingly, FTX exchange CEO Daniel Friedberg has a direct link to the 2008 Ultimate Bet room “super-user” scam, in which room owner Russ Hamilton defrauded online poker players out of $50,000,000.
Numerous poker players lost a substantial amount of money when FTX went bankrupt and will likely never be able to retrieve it. The poker player who retrained as a great crypto trader, Alex Weiss, suffered the most: he retained several million dollars in his FTX account, his entire winnings from successful crypto trading. Another notable poker player, Karl Schappe-Gatien ($2,600,000 prize money on Hendon Mob), stated that he left 35 percent of his riches in the balance of the exchange.
Binance has not yet blocked Russians.
Binance, the most popular cryptocurrency exchange, is attempting to retain Russian access after the collapse of FTX and numerous other sites. The management is working with European authorities to continue servicing Russian clients despite the eighth package of EU sanctions, which have been in place for a month and a half. Obviously, they want to do so on behalf of Binance’s non-European legal companies.
According to the rhetoric, the exchange’s negotiating position is not very strong, therefore it would be unwise to assume that the Russians would emerge relatively unscathed. However, there is a possibility, since Binance CEO Changpeng Zhao has identified Russia as a significant market for his firm. Remember that since the spring, Russians have been unable to hold more than €10,000 in their bank accounts.
Bybit, a large cryptocurrency exchange headquartered in Dubai with a P2P trading segment, said that it will not apply restrictions against Russians. Huobi, OKEx, and Kucoin continue to service Russian citizens for the time being.
LocalBitcoins, Crypto.com, Kraken, Coinbase, and Blockchain all declined to operate with Russian clients after the implementation of the eighth EU sanctions package.
The Russian Duma was presented with a bill to restrict and control cryptocurrency mining.
16 MPs introduced a draft to the State Duma last week to control the mining of cryptocurrencies and their subsequent sale in Russia. It is intended to legalize only Proof-of-Work mining, in which the likelihood of producing a block in a blockchain is dependent on the computational capacity of the equipment.
The paper states that the digital currency produced from mining “must be sold without the use of the Russian information infrastructure,” with the exception of transactions under the experimental legal system that permits the use of cryptocurrencies, such as for the delivery of imported products.
Simultaneously, cryptocurrencies may be sold on foreign websites without adhering to the requirements of the legislation governing currency control, but only after notifying the Federal Tax Service.
The measure also prohibits promoting (or providing in any way) digital currency to the general public, with the exception of mining:
In the Russian Federation, it is banned to promote and (or) provide digital currencies and products (works, services) to an infinite number of individuals in order to arrange the issuance, issuance, organization of circulation, and circulation of digital currency (except for the mining of digital currency).