Huobi Anticipates Break-Even in Q3 Following Consecutive Losses

Japan is taking steps to approve exchange-traded funds (ETFs) tracking spot cryptocurrency prices, a regulatory shift that could take effect as early as 2028, according to a CoinPost report citing a Jan. 25 article by Nikkei.Photo by Jezael Melgoza on UnsplashThe timeline reflects the legislative steps required before retail investors can access digital assets through traditional brokerage accounts. Japan’s financial regulator, the Financial Services Agency (FSA), plans to amend investment regulations to permit cryptocurrencies as eligible assets for investment trusts. SBI, Nomura prepare crypto productsAccording to the report, major financial heavyweights, including SBI Holdings and Nomura Holdings, are already developing products in anticipation of regulatory approval. If cleared by the Tokyo Stock Exchange, the listings would allow Japanese investors to trade Bitcoin products alongside standard stock or gold ETFs. Institutional interest appears robust. A Nikkei survey conducted in November identified six major firms weighing the development of crypto investment trusts: Nomura Asset Management, SBI Global Asset Management, Daiwa, Asset Management One, Amova, and Mitsubishi UFJ. These companies are reportedly exploring products tailored for both retail and institutional clients. However, the 2028 target is largely dictated by the pace of tax reform. Government plans call for crypto profits to be taxed at a uniform 20%, replacing the current progressive system and putting digital assets on the same footing as equities and foreign exchange. The revised tax treatment would also apply to crypto ETFs and derivatives. At present, crypto gains are treated as miscellaneous income, leaving investors subject to progressive tax rates that can climb to roughly 55% once local levies are included. Crypto market slides amid volatility As Japan maps out its long-term regulatory course, recent market activity has been volatile, tied to potential currency interventions and U.S. political uncertainty. Bitcoin briefly surged to $91,000 over the weekend, a move CoinDesk reports some traders attribute to suspected Japanese intervention in the foreign exchange market. The theory suggests a transient reversal in the yen’s recent weakness forced an unwinding of leveraged carry trades, temporarily boosting the world’s largest cryptocurrency. However, the momentum was short-lived. Bitcoin is currently trading near $87,500, down 1.45% over the previous 24 hours. Market sentiment has been dampened by fears of a U.S. government shutdown and renewed trade tensions. On the prediction market platform Polymarket, participants have priced in a 78% chance of another government shutdown by Jan. 31. Compounding investor anxiety are President Donald Trump’s tariff threats. Trump recently warned he would impose 100% tariffs on Canada should the U.S. neighbor sign a trade deal with China. Canadian Prime Minister Mark Carney has since announced that Ottawa has no plans to forge such an agreement, according to CNBC. Monetary policy remains a headwind for risk assets. Ahead of the Federal Reserve’s interest rate decision this week, the CME FedWatch Tool indicates traders expect the central bank to hold rates steady in the 3.5% to 3.75% range at the Jan. 28 meeting. Markets are pricing in only a 2.8% chance of a 0.5% cut. The prospect of rates remaining unchanged offers little incentive for investors to pivot aggressively toward riskier assets like crypto. Gold, silver reach record levels This risk-averse environment has funneled capital into precious metals, driving prices to record levels. Both gold and silver have hit all-time highs, surpassing $5,000 per ounce and $106 per ounce, respectively. Amid the uncertainty, retail investors in neighboring markets are showing caution. In South Korea, a weekly survey by CoinNess and Cratos of 2,000 respondents found that 43.2% of investors are holding existing crypto positions without making additional purchases. Another 22.7% said they are actively trading, while 21.4% reported having no current position and waiting for a more favorable entry point. The remaining 12.7% said they are staying out of the market entirely. 

FTX, the failed cryptocurrency exchange founded by Sam Bankman-Fried, has taken legal action by filing a lawsuit against four former employees of Salameda, a Hong Kong-based affiliate closely linked to the exchange’s former CEO.According to a Delaware bankruptcy court filing in the United States on Thursday, the lawsuit alleges that five individuals exploited their personal connections to prioritize their asset withdrawals from FTX during a period of uncertainty regarding the exchange’s stability. The defendants in question are Salameda’s former employees — Michael Burgess, Matthew Burgess, Kevin Nguyen, and Darren Wong — as well as Michael and Matthew’s mother, Lesley Burgess, and two companies: 3Twelve Ventures and BDK Consulting.Photo by Bermix Studio on Unsplash Preference period clawbackThe critical withdrawals occurred within the 90-day period leading up to FTX’s bankruptcy filing on November 11, commonly referred to as the “Preference Period.” Under US law, customers who withdrew their crypto assets during this timeframe could potentially face lawsuits from the exchange’s creditors seeking to recover these funds, a process known as a “clawback” under bankruptcy regulations.The total value of these suspicious transfers is estimated at $157.3 million, with more than $123 million of that sum withdrawn after November 7, 2022. Michael Burgess is alleged to have received around $73 million of these illicit withdrawals.The lawsuit claims that the individuals leveraged their connections within FTX Group to ensure preferential treatment over other customers. In a specific accusation, Matthew Burgess is said to have engaged other FTX Group employees to expedite certain withdrawal requests from his FTX US exchange accounts while falsely representing the accounts as his own. 11th hour withdrawalsIn this way, Burgess and the other four defendants managed to get funds out when most other FTX customers couldn’t. The final withdrawals were executed only hours before FTX.com suspended all withdrawals on November 8, 2022, according to the lawsuit. As one commentator on X put it, “FTX employees were manually reviewing large withdrawals & pushing some ahead.”The legal filing also delves into the significant profits the defendants reportedly accrued from trading cryptocurrencies in the months leading up to FTX’s collapse. Even after their apparent departure from the FTX Group, Michael Burgess, Nguyen, and Wong actively traded through entities such as 3Twelve and BDK, with monthly trading volumes ranging from $100 million to $400 million.A noteworthy aspect of this activity is that their trading capital was allegedly derived from the FTX Group. The court filing goes on to claim that “Burgess, Nguyen and Wong received substantial transfers of digital assets and fiat currency from exchange accounts associated with FTX Group entities, including approximately 13.1 million FTT sent to Darren Wong, more than 1 million SOL sent to Michael Burgess, and nearly $4 million USD for ‘bonuses’ between Michael Burgess, Nguyen and Wong.” Retail clawback riskThis legal battle and the allegations against the former Salameda employees are being watched closely by other FTX bankruptcy stakeholders. The FTX Debtor has suggested that it will pursue clawbacks vigorously. That has concerned former retail customers who managed to withdraw assets in the final days before the platform collapsed. Equally, it is a worry for current FTX creditors who may have withdrawn some but not all of their assets before the exchange was shuttered.

Wallets belonging to the defunct Japanese Bitcoin exchange Mt. Gox have transferred over 140,000 Bitcoin (BTC), valued at approximately $9 billion, to an unknown address.  Sell-off fearsThis significant movement began in the early hours of Tuesday morning in Asia, marking the first such transfer from Mt. Gox’s cold wallets in over five years. Julio Moreno, head of research at CryptoQuant, initially confirmed that 12,239 Bitcoin had been transferred from Mt. Gox over the course of an hour. A short time later, he provided an update on X, stating:"All coins have been transferred to a new address." Despite market disquiet, the prevailing view which subsequently emerged is that the transfer is believed to be part of a plan to distribute assets back to creditors before the October 31, 2024 deadline. Alex Thorn, head of research at Galaxy Digital, shared his perspective on X, suggesting that most of the transferred Bitcoin would likely be held by creditors rather than being sold on the open market. Despite these reassurances, the market reacted negatively for a time. Bitcoin's price dropped by 1.4% since the start of Asian trading hours, falling to a low of $67,680 from a Monday high of over $70,000.Photo by Kanchanara on UnsplashNo Bitcoin FiresaleTo quell fears of a massive Bitcoin sell-off, Mark Karpeles, the former CEO of Mt. Gox, addressed the situation on X. He stated: “As far as I know, everything is fine with MtGox. The trustee is moving coins to a different wallet in preparation for the distribution that will likely happen this year. There is no imminent sale of bitcoins happening." Rehabilitation trustee Nobuaki Kobayashi also issued a press release, clarifying that no sale of Bitcoin or Bitcoin Cash (BCH) had taken place. He assured that the group was "managing bitcoin and bitcoin cash in a secure manner." Wallet activity reveals that these movements were executed through thirteen transactions. A test transaction worth $3 was made on May 20, followed by another smaller transaction of $160 early Tuesday. The remaining transactions varied from $1.2 million to $2.2 billion worth of Bitcoin. Bitinfocharts data shows that all of Mt. Gox's Bitcoin has now been consolidated into a single wallet. A long road to repaymentIn September 2023, Mt. Gox’s trustee announced that the repayment deadline had been extended by 12 months to October 31, 2024. It looked like repayments were imminent in November. However, those communications referenced cash repayments rather than the distribution of Bitcoin and Bitcoin Cash. Some cash repayments had started in December 2023. Speculation in January that the bankruptcy estate would begin the distribution of Bitcoin led to market fears of the impact that would have on the Bitcoin unit price. The extension provided a longer timeframe for preparing the distribution of assets to creditors. Mt. Gox, launched in 2010, quickly rose to prominence, becoming the largest Bitcoin exchange by 2013, handling 70% of all Bitcoin trades worldwide. However, the exchange faced a dramatic downfall in early 2014.  It suspended trading and stopped all withdrawals after losing hundreds of thousands of Bitcoin in a hack. Subsequently, the site went offline, and the company filed for bankruptcy protection after losing over 800,000 Bitcoins. Creditors have been waiting for repayment ever since.