Bitcoin Futures on CME Soar Amidst FTX Claims and CEO Conviction
Summary:
Bitcoin futures on CME reached an all-time high as BTC's price momentarily surpassed $35,000. The future contracts' open interest reached $3.65 billion, implying an increase in traders tapping the Bitcoin market via derivatives. Meanwhile, FTX claim pricing reached 57%, influenced by the company's prior investment in AI firms. This follows the conviction of Sam Bankman-Fried, former FTX CEO, on all seven charges in his case. Bankman-Fried was found guilty for multiple counts, including wire fraud and securities fraud. His sentencing will be pronounced in March 2024.
Bitcoin future contracts on CME soared to a new record this week, with BTC's value momentarily topping $35,000. In related developments, FTX recorded claim pricing as high as 57%, per information sourced from Claims Market. This follows shortly after Sam Bankman-Fried's conviction on all seven counts in his criminal case, shortly after the state restated its case to the defense.
Bitcoin futures trading on CME hit a record high this week, with open interest climbing to $3.65 billion, a never-before-seen figure. This indicator implies an increasing number of participants are venturing into the Bitcoin sector via derivatives. There were 122 significant investors involved in Bitcoin futures in the week ending October 31, marking the greatest ever recorded. Consequently, Bitcoin futures premiums on CME have reached their highest in over two years.
Crypto markets are currently witnessing a surge, mostly due to speculations that the U.S. Securities and Exchange Commission (SEC) will soon approve their first spot Bitcoin ETF. This expectation has led to the greatest inflow into crypto exchange-traded products in over a year, with CoinShares reporting crypto fund inflows amounting to $326 million last week.
The current claim pricing of FTX has topped at 57%, data from Claims Market suggests. The rise in FTX's claim pricing is linked to the valuation of the AI firms in which the now-insolvent crypto exchange had earlier invested. When companies face financial hardships or insolvency, creditors lay claims to salvage some of their investments. This trading is mostly done based on predictions about the total amount that will be recovered. The estimated recovery value rises as the claim pricing increases.
As FTX's stakes in these AI firms escalated, so too did the expected recovery value from the bankruptcy proceedings. A claim essentially asserts a certain monetary value. The claim percentage refers to the expected portion of the investment amount to be reclaimed from the platform. FTX's claim value outperforms other insolvent crypto businesses, including Celsius (35–40%), Genesis (around 50%), Alameda (10%) and Three Arrows Capital (merely 7–9%).
On November 2, FTX's former CEO, Bankman-Fried, was convicted on all seven counts, and his sentencing is due in March 2024. After deliberations lasting roughly four hours, a New York jury found Bankman-Fried guilty of all seven charges. The charges cover two counts of wire fraud, wire fraud conspiracy, securities fraud, commodities fraud conspiracy, and a count of conspiracy to money laundering. His sentencing will be declared by New York District Judge Lewis Kaplan on March 28, 2024, with the final decision lying with Kaplan, despite government prosecutors proposing a sentence.
Each of Bankman-Fried's crimes carries a maximum penalty ranging from five to 20 years in prison, with the counts related to wire fraud, wire fraud conspiracy, and conspiring to commit money laundering each carrying a maximum 20-year sentence. Following the court hearing, U.S. Attorney Damian Williams branded Bankman-Fried's crimes as a scheme to make him the "king of crypto", and one of the largest financial scams in U.S. history, while holding a press conference outside the court.
In her concluding statements on Bankman-Fried's defense on November 2, U.S. Assistant Attorney Danielle Sassoon argued that the prosecution had successfully established Bankman-Fried's guilt on the seven counts of fraud and conspiracy to commit fraud. Sassoon asserted that the ex-FTX CEO deceived clients about their funds’ safety, and FTX’s relationship with Alameda Research. She suggested that Bankman-Fried refrained from hiring a risk officer, knowingly wrongful in his actions.
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Published At
11/3/2023 8:18:37 PM
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