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Block 1: Key news
Polymarket has the wind in its sails
Decentralized prediction marketplace Polymarket has seen its betting volume exceed one billion dollars, mainly thanks to the US presidential elections. On this platform, users can, among other things, place cryptocurrency bets on candidates Donald Trump and Kamala Harris, and thus on the outcome of the US presidential elections. Polymarket is now used as a trend indicator to give forecasts on certain events. The platform raised $45 million in May and plans to launch its own cryptocurrency to finance its development.
Société Générale X Bitpanda
Société Générale - Forge has announced a partnership with Bitpanda to make its euro stablecoin, EURCV, available for trading on the Austrian platform. This initiative follows the integration of EURCV on the Solana blockchain. In accordance with MiCA regulations, which govern stablecoins in Europe, EURCV is one of the assets compliant with the new rules. With a capitalization of 33 million euros, it becomes the third euro stablecoin on the market, behind Circle's EURC and STASIS's EURS.
ETFs: Bitcoin VS Ethereum
Since their launch at the end of July, Ethereum Spot ETFs in the USA have been experiencing difficulties, registering significant net outflows, with a peak of $79 million on Monday September 23. Traditional investors seem reluctant to commit to these products, preferring for the most part Bitcoin Spot ETFs. Grayscale, via its ETF ETHE, has suffered the brunt of these outflows. Analysts attribute this lack of interest to investors' familiarity with bitcoin as "digital gold" and a reluctance to diversify into Ethereum.
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Kraken comes to Europe
Kraken, the cryptocurrency exchange platform, is expanding into France with the acquisition of Coin Meester, a European digital asset service provider (DASP). This acquisition enables Kraken to bypass the direct procedure of applying for PSAN status, required to advertise and canvass customers in France. Coin Meester, based in the Netherlands, already holds the necessary licenses to operate in Europe, notably in France and Poland. This acquisition strategy, adopted by several major crypto platforms, enables Kraken to expand its presence in Europe despite the tightening of regulations, notably under MiCA.
Block 2: Crypto Analysis of the week
Caroline Ellison, barely 30 and former CEO of Alameda Research, played a central role in one of the world's biggest financial scandals. The former companion of Sam Bankman-Fried, the 32-year-old deposed founder of FTX, was sentenced to two years in prison, after pleading guilty and testifying against her former boyfriend and business partner. She faced up to 110 years in prison for fraud, but her exemplary cooperation with the authorities enabled her to escape a harsher sentence. A judicial saga that revealed the behind-the-scenes story of a $9 billion fraud.
Caroline Ellison was no mere accomplice in this story. As head of Alameda Research, the hedge fund with close ties to FTX, she found herself at the heart of the manipulation of client funds. The scheme was as simple as it was dangerous: use FTX funds to finance risky transactions, real estate purchases and political donations.
Specifically, Alameda Research's treasury, which should have been diversified, was in fact largely composed of FTT, FTX's in-house cryptocurrency. This revelation caused widespread panic and an unprecedented liquidity crisis. Competitor Binance offered to buy FTX, but withdrew on discovering the extent of the financial damage. Within days, FTX had collapsed, wiping out the savings of thousands of customers and investors.
During Sam Bankman-Fried's trial, Ellison testified against him, describing the questionable practices at FTX and Alameda. Bankman-Fried, in a last-ditch effort to defend himself, tried to pin the entire blame for the debacle on Ellison, describing her as a bad manager. Despite this maneuver, Caroline's testimony was decisive for the prosecution, sealing the fate of the former crypto magnate, who was sentenced to 25 years in prison.
Ellison, in her testimony, explained how customer funds were transferred from FTX to Alameda to make up for colossal losses due to failed trades and risky investments. The former executive described Sam Bankman-Fried as an unscrupulous figure, capable of dipping into customers' funds to fuel his megalomaniac schemes, but also as a man under whose influence she fell.
Caroline Ellison will serve her sentence in the Boston jurisdiction, an outcome that could mark the beginning of a redemption, at least in legal terms. The judge acknowledged that, although she was a key element in Alameda's disastrous management, her testimony and assistance to investigators played a crucial role in Sam Bankman-Fried's downfall.
The story doesn't stop with Caroline Ellison and Sam Bankman-Fried. Other major players in this legal drama are still awaiting trial. Gary Wang and Nishad Singh, two co-founders of FTX, will go on trial in the coming months. Ryan Salame, former CEO of FTX's Bahamian subsidiary, has already been sentenced to seven and a half years in prison after pleading guilty, but without testifying against Bankman-Fried.
This series of trials highlights the dramatic consequences of organized fraud, where the roles of each individual continue to be dissected in the courtroom. The involvement of these players in the chaotic management of FTX and Alameda is far from being fully clarified, but the penalties are likely to be severe.
Two years after the collapse of FTX, procedures to recover customer funds have finally begun. While the affair caused thousands of cryptocurrency investors to lose confidence, repayment efforts are moving forward. Victims should receive almost all their funds back, and some beneficiaries may even receive additional compensation.
The refund, estimated at between €13 and €15 billion, is a small relief for the thousands of customers who had seen their money disappear in the FTX debacle. However, the idea of relaunching the platform, mooted for a time by the team in charge of restructuring, has been definitively abandoned. FTX, once the world's second largest cryptocurrency exchange, remains a symbol of the risks associated with lax regulation and greed in the world of digital finance.
Block 3: Gainers & Losers
Crypto chart(Click to enlarge)
Block 4: This week's readings:
FTX insider Caroline Ellison sentenced to two years in prison (Wired)
Can cryptocurrencies ever go green (The Conversation)
Bitcoin forks: pathways to innovation or disruptive forces (Bitcoin Magazine)
