After learning that the strike schedule would proceed, the airline decided to cancel the Perth and Sao Paulo routes, Khaya Buthelezi, senior manager of corporate relations for the airline, told Reuters.

“That’s the decision we took last night since we could not find partner airlines that we can transfer our customers to, it became clear that those two routes must be cancelled,” he said, as reported by Zawya.

Buthelezi further said that because the airline had prepared backup plans, there were no disruptions to domestic flights or routes throughout Africa early.

Buthelezi reported seeing some pilots picketing outside the SAA office at Johannesburg’s OR Tambo International Airport.

However, South African Airways managed to ensure the suspension of the pilots’ strike that commenced on December 7 early morning, by effecting an agreement post the “productive discussions” between SAA’s Executive Management and the South African Airways Pilots Association (SAAPA).

As part of the resolution, management has agreed to a further 1% salary increase, bringing the total salary increase for SAA pilots to 9.47%.

Speaking to public news broadcaster SABC, SAA pilot Sibusiso Nxumalo, speaking on behalf of the National Transport Movement Pilots Forum and the SAA Pilots Association (SAAPA), stated that their demands went beyond money and focused on improved working conditions and employment conditions.

“The company has made a profit in the past couple of months. It’s not like we want a piece of that pie, we just want to have better working conditions,” Nxumalo said.

In a statement released by SAA, it was noted that the initial demand made by SAAPA in May 2024 for a 30% increase in pilot salaries was later reduced to 15%, along with related benefits.

According to a statement from SAA’s acting CEO, John Lamola, the company’s decline into bankruptcy would be triggered by the demand for a 15% pay increase.

An 8%–46% pay raise retroactive to April has been offered by the airline. Before the national carrier filed for bankruptcy protection in 2019, it was about to be liquidated.

Meanwhile, the first net profit reported by South African Airways in more than ten years marks a significant turning point in the airline’s recovery.

The post South African Airways cancels some flights due to pilots’ strike appeared first on International Finance.

It will take some time to rebuild your credit score post-bankruptcy, so practising patience will be key here. And at the same point of time, instead of sitting idly and leaving everything on the fate, you need to make calculated moves to ensure that your credit gets rebuilt.

Here are the seven tips that will help you rebuild your credit after Chapter 7 or Chapter 13 bankruptcy:

Check Credit Report

Check your credit records for unpaid bills. After you discharge your obligations, your credit record may take 60 days to update. Be mindful of your debts. Make sure that the credit bureaus have marked your account “discharged.”

Contest credit record errors with the credit bureaus. Legally, credit reporting companies must investigate and respond within 30 days.

Learn how to access your credit report on the FTC website.

Resolve Debts

Your monthly revenue should guide your budget. Reduce your spending and save to pay off debts gradually.

Authorise Credit Card Use

Be an authorised user of a credit card with acceptable payments. Request that a family member allow your credit card use. This can boost your credit score by improving your payment history.

Use New Credit Cards Responsibly

After bankruptcy, don’t overspend on a new credit card or you’ll get into debt again. Use your cards only for what you can afford and pay off the debt in full. Avoid interest by paying your bill inside grace time. On-time payments increase your credit score by 35% from your payment history.

Finally, avoid credit card maxing. To increase your credit score, keep your credit utilisation ratio below 30%.

Get A Secured Card

You don’t need a certain credit score for a secured card. If you default, the credit card company will keep your security deposit. Your security deposit determines your credit limit.

Protect Credit With An Emergency Fund

Having an emergency fund helps with unforeseen bills. If you can’t pay, use your emergency money. First, set up a monthly amount and then budget. Most financial experts recommend saving five to six months of spending in an emergency fund.

Use Loans/Credit-Builder Accounts

Cosigners can help you get a small personal loan to rebuild credit. With a cosigner, lenders may approve your loan application quickly because they provide legal and financial support. Use the loan to restore your home, fix your car, or start a passive investing portfolio. Once you start paying on time, your score will rise.

Another option is a credit-builder loan. A bank holds your money in an account until you pay off this secured installment loan. You can choose a 12- or 24-month loan term and qualify even with bad credit. By making monthly payments on schedule, your credit score will rise.

The post How to rebuild credit after bankruptcy appeared first on International Finance.

“Creditors still have an opportunity for repayment with the bankruptcy process. Bankruptcy is handled in federal courts,” the act states.

While opting for financial protection under the bankruptcy clause can provide a business with some degree of relief, at the end of the day, it impacts the entity’s credit. Also, the credit scores of those running the organisation.

After filing for bankruptcy, an entrepreneur needs to rebuild his/her credit, which will take time and consistent effort, but necessary if the person wants to start a venture afresh.

Does bankruptcy affect credit?

Before determining a person’s credit history, lenders always keep the ‘Payment History’ in their mind. When a business files for bankruptcy, the individual running it will not be repaying covered debts in full as per the original credit agreement. However, it will severely downgrade the person’s credit score.

“A bankruptcy filing will appear on an individual’s credit report for up to 10 years, making it difficult to obtain credit or loans in the future. An entrepreneur may also have difficulty obtaining credit from suppliers or vendors, as they may be hesitant to extend credit to a business that has filed for bankruptcy,” Entrepreneur.com suggested.

Remember, bankruptcy wipes away/reduces debt that the entrepreneur cannot afford to pay and tells the world that he/she is at credit risk. It will make it tough for the concerned person to even borrow and spend. Getting a credit card, a personal bank loan or a mortgage will also be very difficult.

However, there is another side of the coin. Bankruptcy also comes with the prospect of clearing negative items from the entrepreneur’s credit report, thereby leaving only the bankruptcy itself as a negative remark. The person can, in fact, discharge most of the debts and start afresh.

From there on, lenders may not approve certain types of credit or they may clear the credit application with higher interest rates or other unfavourable terms.

In the United States, negative FICO scores (creditworthiness assigned by credit bureaus) take down credit scores too. An entrepreneur with an average 680 FICO score will lose between 130 and 150 points in bankruptcy. Someone with an above-average 780 score will lose between 200 and 240 points. Both will become “Risky Borrowers”, making it difficult to get loans/unsecured credit.

“On the other hand, if your score is in the 400s or 500s when you file, it’s possible that your score may experience a boost from the bankruptcy filing. People in this score range have seen credit score boosts as high as 50 points after filing for bankruptcy,” Debt.org explained the process.

Bankruptcy under Chapter 13 stops collection actions and creates a plan for borrowers to partially repay creditors over a fixed number of years. Chapter 7 eliminates most unsecured debts, meaning the creditors cannot recoup what they advanced.

Chapter 7 bankruptcy will negatively affect the FICO score for 10 years. A Chapter 13 filing, on the other hand, will remain on the person’s record for seven years after receiving a Bankruptcy Code discharge/dismissal.

“Bankruptcy’s impact on your credit score will also vary according to how much debt you had discharged and the ratio of positive to negative accounts on your credit report. This is because major credit score factors such as late payments and credit card utilisation will be reset,” Debt.org commented further.

Can the bankrupt person get a credit card?

Yes, he/she can, but it will be difficult after filing for bankruptcy. Lenders will see the person as a ‘Higher Risk’.

The practical way out here will be availing of a card tailored for rebuilding credit. A secured credit card, which anyone can get even after entering bankruptcy, typically has a credit limit equal to the amount of security deposit that is provided.

“However, some unsecured card issuers won’t pull a credit score or may extend a line of credit even if there are blemishes on someone’s credit history. Just be aware that these types of cards typically have extremely high rates and an abundance of fees. A secured card is likely the better option with lower costs,” Entrepreneur.com noted.

However, it must be clarified here that the bankrupt persons cannot apply for a credit card, while the legal proceedings are on. You will be requiring court approval to opt for any fresh credit line.

Under Chapter 7, bankruptcy takes approximately four to six months after the initial filing to be completed and the applicant’s debts are discharged. A Chapter 13 bankruptcy takes somewhere between three to five years, as the clause will restructure the debt that the concerned person will pay off over time. In both cases, if the person is applying for a credit card during the legal proceedings, he/she will be requiring court approval.

Charting the recovery path

After bankruptcy filing, find out the accounts which are still open. While bankruptcy cancels most debt, some need to be paid as well. While paying down these debt balances will lower the debt-to-income ratio, that will only happen when the payments are consistently on time.

Pay attention to your credit balances, which will directly impact the credit utilisation ratio. Reduce credit card usage and pay down debt balances whenever possible.

Save money for each payday, and build emergency savings. This will help you to avoid incurring future debt that could impede rebuilding credit.

Avail a secured credit card to rebuild your credit.

Some of the secured card issuers allow cardholders to move on to an unsecured card after making consistent and on-time payments. This will make sure that you do not need to apply for a new card as your credit starts to improve.

Talking about unsecured cards, product issuers will not check your credit score and will even extend a line of credit irrespective of your credit history. These cards, however, come with fees and sky-high rates, so be careful about that. Secured cards, on the other hand, provide lower costs.

After getting your new card, focus on improving your credit score to qualify for better credit cards and loans with favourable terms.

Pay your monthly bills on time every month to improve your FICO Score. Pay off your existing debts. Keep your credit utilisation ratio low, as the amount of total credit you use as a percentage of your credit limit will also weigh in at 30% of your score.

Sign up for something like United States-based ‘Experian Boost’, which counts your payment behaviour from one of your linked checking accounts. There are digital tools like American Express’ FICO Score Planner, which maps out a blueprint of credit-building actions.

Use your secured credit card to build good payment behaviour and improve your credit profile. Your credit score will rise steadily over time. So be patient and practice responsible spending habits.

Also, opt for a credit builder loan. You can also get a secured loan that allows borrowing against savings. The payment activity for a credit builder loan will be reported to a major credit bureau, which will improve your credit score too.

Get a co-signer to boost the chances of your loan getting approved. In this case, lenders will consider the co-signer’s credit score too. And the co-signer will be equally responsible for paying the loan back. Also decide on things like for what purpose, the line of credit will be used, what will be the credit limit, and a repayment plan.

On the personal front, control your spending habits, as overspending leads to more debt. Explore money management apps. Even 21st century banks are also offering similar options. Check your bank balance daily, and check regularly whether your spending limit matches up with your monthly budget. Most importantly, avoid piling up a massive credit card bill at any cost.

Patience is the key here

If a bankrupt entrepreneur is making consistent payments, and has a low credit utilisation ratio and low debt-to-income ratio, he/she will see positive changes to their credit score after approximately six months (from the time they filed their bankruptcy plea).

Take a long-term approach here. Understand that the mention of bankruptcy will be on your credit report for seven to ten years. It is up to you to stay patient and act responsibly to improve your credit score.

The post Rebuilding credit after bankruptcy appeared first on International Finance.

Angolan Finance Minister Vera Daves spoke with World Bank Group Ex-President David Malpass on how the economic fallout from COVID-19 and Russia-Ukraine has impacted their country’s revenue and debt. Kevin Watkins, CEO of Save the Children, and K.Y. Amoako, President of the African Center for Economic Transformation, described how unsustainable debt can slow countries’ progress and divert resources that could otherwise be used to invest in health, education and more.

Citi’s Julie Monaco and World Bank Chief Economist Carmen Reinhart both referred to the debt crises of the 1980s and 1990s and the lessons this challenging era can offer.

Last year, Sri Lanka defaulted on its external debt (excluding debt to multilateral organizations such as the World Bank) and in July 2022 saw the resignation of an Executive President for the first time in Sri Lanka’s history. The country faced a shortage of fuel, cooking gas, medicines and many essential goods.

At the same time, the country faced a massive political crisis that sparked island-wide protests that led to the resignation of Mahinda Rajapaksa as prime minister in May last year. Two months later, President Gotabaya Rajapaksa Mahinda’s brother also had to resign.

The island nation has defaulted on its $51 billion foreign debt for the first time since gaining independence in 1948 as it grapples with its worst economic crisis. The South Asian country was grappling with soaring inflation of 17.5%, a 12-hour power outage, and dwindling foreign reserves.

While many experts have pointed out that excessive government spending, tax cuts and the first and second waves of COVID-19 worsened the country’s economic crisis, others believe Sri Lanka’s close ties with China have fueled the country’s debt crisis. However, Sri Lanka is not the first country to default on its debts. Over the past century, several countries have defaulted on one or more occasions. According to the World Economic Forum, 147 countries have ‘sovereign defaulted’ on their debt since 1960.

What is the sovereign default?

Sovereign bankruptcy is the failure of a national government to repay its debts. Governments are typically reluctant to default because it is likely to lock the country out of debt markets for years to come and make borrowing more expensive, at least for a period when it becomes possible again. Lenders have limited recourse in the event of a sovereign debt default, as no international court can force a country to pay, although it can claim the defaulted borrower’s assets abroad. Countries borrowing in their own currency can always print more as an alternative to sovereign default. and may also avoid doing so by generating more tax revenue.

Private investors investing in the sovereign debt of other countries closely study the economy, public finances and politics of a bond-issuing country to assess and assess its risk of default. Other countries and multinational lenders such as the International Monetary Fund (IMF) and the World Bank lend to states to achieve policy goals ranging from improving the borrowing country’s governance to boosting the lender’s exports, and may be able to insist on their repayment even if the borrower defaults on other debts.

Government bonds issued in local currency may also attract private foreign investors, but are often primarily bought by the country’s banks and private individuals. A default by a sovereign in its own currency is easier to avoid and can be more politically painful than a default on external debt. Because a national bankruptcy entails a number of costs and economic risks, it is usually used as a last resort. Severe economic downturns, financial crises and political unrest can trigger a national bankruptcy. For example, Russia’s default in June 2022 was the result of economic sanctions imposed on the country for its invasion of Ukraine, including a freeze on Russia’s foreign exchange reserves abroad.

Types of sovereign default

Experts say, a nation may have momentarily defaulted if it temporarily delays interest payments on a small number of its bonds for administrative reasons unrelated to its capacity or willingness to repay debt, as the US Treasury once did in the 1970s. So long as the repayment snag is quickly ironed out, such a ‘default’ is unlikely to have any long-term consequences, or to be widely viewed as one. For instance, amid one of the US government’s recurring episodes of debt ceiling brinkmanship, the United States continues to be among the highest-rated sovereigns in the world, despite Standard & Poor’s downgrading its long-term rating for US national debt from AAA to AA+ in 2011.

Governments that are already generally believed to be likely to take that course of action may occasionally negotiate a bonds exchange, exchanging their previously issued and frequently severely discounted bonds for new ones of lower value, in order to prevent this outright default. In exchange for the sovereign’s promise to continue making lower debt payments, the bondholders effectively take a ‘haircut’ (a risk of the underlying asset) on the money they have already lent. Lenders agree that such an exchange is the least terrible choice available to them. This is an implicit default because the exchange can only take place if the sovereign’s ability to honour its commitments to previously issued debt is severely questioned by creditors. With the assistance of its European partners, Greece made a number of similar settlement offers to bondholders during the European sovereign debt crisis.

Consequences of a sovereign default

For the defaulting government and its citizens, the consequences of a sovereign debt default vary depending on factors such as the state of the economy and public finances, the degree of dependence on external financing and the likelihood that creditors will return in the future.

Credit markets tend to be large countries with exploitable natural resources like Russia to be more open and forgiving than small low-income countries, which are often dependent on IMF loans and aid. Meanwhile, Russia defaulted on its loan commitments in 1918, when Lenin’s government rejected the Tsarist Empire’s debt, and again on its ruble-denominated commitments in 1998, although it continued to make payments on its external debt after a brief moratorium. If a country is highly dependent and promotes foreign creditors to finance investments, the consequences of the sovereign default are likely to be slower economic growth, making the situation more difficult for consumers and businesses.

The sovereign debt bankruptcy will also lower the net asset value of all bond mutual funds holding the defaulted debt and its market value will fall. Conversely, a sovereign default could present an opportunity for distressed debt investors, who could buy the bonds at deep discounts to face value in the hope that they might be worth more later after a debt restructuring. Sovereign debt defaults also create winners and losers in the market for credit default swaps, which are financial contracts that pay out like an insurance policy in the event of a default. Credit default swaps allow bondholders to hedge against the risk of default and allow speculators to bet that a default will occur.

Countries that defaulted

In 1557, Spain became the first country to default. Notably, this European country defaulted on its debt 15 times between the 18th and 19th centuries. Argentina defaulted on its $132 billion in loans in 2001. As a result, the South American country defaulted again in 2016 and 2020.

Russia defaulted in 1918 and 1998. After the breakup of the USSR, Russia inherited a $100 billion foreign debt in 1993 at the request of creditors in exchange for promised financial assistance, according to the International Monetary Fund. Amid international sanctions imposed on the country for invading Ukraine, experts have warned that Russia could default on $117 billion worth of loans again.

Ukraine defaulted on its loans in 1998 and 2020. Between 2017 and 2018, the Latin American country of Venezuela defaulted on its $60 billion worth of loans. Greece twice defaulted on its $1.7 billion and €456 million debt in 2015. Ecuador defaulted on payments in 2008 and 2020. Mexico defaulted in 1982 and 1995. In 2010, the African country of Jamaica defaulted on its $7.9 billion debt.

In 2020, amid the pandemic, two Latin American countries, Argentina and Ecuador defaulted. Argentina adopted a take-it-or-leave attitude towards creditors, often leading to public dissent and dramatic breakdowns in negotiation. But in each round of negotiations, the country gave the creditors ground. Argentina started the process with support from the International Monetary Fund (IMF), whose economists backed Argentina’s calls for a generous restructuring.

However, Argentina’s final agreement with creditors included a 45% discount on interest payments and a six-month grace period, in contrast to the government’s original requirement of a 61% discount and a three-year grace period. Argentina also reluctantly agreed to change the collective action clauses in its bonds, a legal innovation aimed at minimizing so-called hold-outs that emerged from the protracted litigation that followed Argentina’s 2001 debt saga.

In contrast, Ecuador emphasized transparency and quiet consensus-building. Unlike Argentina, Ecuador agreed early on to grant bondholders special legal protections in the event of future restructuring. It also secured financial support from the IMF and received an emergency loan to deal with the public health and economic consequences of COVID-19.

In 2022, Belarus was declared bankrupt by Fitch Ratings and jointly announced with Moody’s Investors Service that Russia’s most trusted ally has officially breached the terms of its debt obligations to foreign investors. The eastern European country’s rating was cut to the default of RD by Fitch, below C. The credit checker cited the country’s failure to provide a dollar coupon payment on $600 million in US Dollar-denominated bonds, which is to be paid by 2027.

Moody’s said on July 14 that the incident constituted a default, but left its rating stable at CCC. Back then, the Belarusian Ministry of Finance accused the international rating agency Moody’s of a provocation which, according to Minsk, is intended to affect the Eurobond market.

The post World Bank & the never-ending sovereign default appeared first on International Finance.

The California-based company announced in March 2023 about cutting 85% of its 750-strong workforce, after the failed assignment of completing its first-ever satellite launch from the soil of the United Kingdom.

Virgin Orbit was founded in 2017 as a spin-off of Sir Richard’s space tourism company Virgin Galactic. Virgin Orbit’s specialisation was in launching rockets from modified Boeing 747 jets, in order to send satellites into space.

Let’s Revisit The Failed Launch

In January 2023, Virgin Orbit’s attempt to send a satellite from the UK met with a failure as the rocket’s fuel filter got dislodged, resulting in the overheating of one of its engines.

The mission, launched from Spaceport Cornwall, had been billed as a milestone for UK space exploration. The success of the mission would have ensured UK’s transformation from satellite manufacturer to rocket and spaceport creator.

As the launch failed, Virgin Orbit scrambled to find new funding and stopped its operations in March 2023. The company, which listed its shares on the Nasdaq index in 2021, had debts of USD 153.5 million as of September 2022.

Now, Virgin Investments will provide the rocket company with a USD 31.6 million lifeline to help the latter stay afloat while it scrambles to find a new buyer. Filing for bankruptcy will also allow it to keep operating and address its financial issues while being protected against creditors.

Failure & Sir Richard Branson: An Old Love Story

The iconic British businessman, born in 1950, has donned many hats. Billionaire, commercial astronaut, appearances in iconic TV shows and films, committing to climate and humanitarian causes, author, you name anything, Sir Richard Branson will be there.

Sir Richard Branson is also known as an adventure freak, as he made several world record-breaking attempts. One of them was the fastest crossing of the Atlantic Ocean by ship. In 1986, in his Virgin Atlantic Challenger II, the billionaire beat the record by two hours with sailing expert Daniel McCarthy. In 1987, his hot air balloon ‘Virgin Atlantic Flyer’ crossed the Atlantic.

Sir Richard Branson also possesses records of crossing the Pacific from Japan to Arctic Canada and the fastest crossing of the English Channel in an amphibious vehicle.

In the 1970s, he formed the Virgin Group, which as of 2023, controls over 400 companies in various fields. In 2000, Sir Richard Branson was knighted at Buckingham Palace for “services to entrepreneurship”. In 2007, he was placed in the Time 100 Most Influential People in the World list. In 2021, Forbes listed Sir Richard Branson’s estimated net worth at USD 5.7 billion. In the same year, he travelled as a passenger on-board Virgin Galactic Unity 22 at the edge of space. The feat saw the then 70-year-old Sir Richard Branson becoming the third oldest person to fly to space.

He is indeed an iconic personality. However, Sir Richard Branson has also been involved in a number of failed business ventures. On the back of Virgin Orbit’s bankruptcy, let’s revisit some of those episodes.

Virgin Cola

Sir Richard Branson’s most infamous business disaster was the line of soda products called ‘Virgin Cola’. The product debuted in 1994 and took on beverage giants like Coca-Cola and Pepsi. Despite the product being poised to overtake Coca-Cola in the British market, the latter gave retailers a tough choice: “Stop stocking Virgin Cola or else be prepared to not see Coca-Cola drinks on your product display racks”.

The tactic worked and Virgin Cola collapsed in 2009, despite having a brilliant age-based consumer targeting campaign, a successful debut on TV (having featured in the Friends episode titled “The One with Joey’s Bag”) and another marketing campaign, in which Virgin Cola’s 500 ml bottles were branded as “The Pammy”, as their curves were designed to resemble actor Pamela Anderson.

Virgin Vodka was a line of liquor released by Sir Richard Branson’s company in 1994. However, unlike Virgin Cola, this alcohol brand never had any market appeal. However, the beverage sector didn’t disappoint him for long as Virgin’s line of wines found remarkable success post-2000, before being taken over by the Direct Wines Company in 2005.

Unsuccessful Stint In Clothing Line

Virgin Clothing made its debut in 1998. Sir Richard Branson envisioned the brand as a high-end fashion label that presented a streetwear vibe. However, customers became unhappy due to a higher price tag. This resulted in Virgin Clothing being shut down for good. However, the billionaire came up with a lingerie line in the form of ‘Virginware’ in 2003, intending to compete with Victoria’s Secret. By 2005, ‘Virginware’ had some 30 stores. However, this too collapsed.

Sir Richard Branson gave another attempt to launch a Virgin-branded line of bridal dresses. ‘Virgin Brides’ premiered in 1996 with the opening of several shops around the United Kingdom. The billionaire even donned a bridal dress to promote his venture. However, this too went bankrupt within the next ten years.

Gigantic Failure In Automobile Front

‘Virgin Cars’ were launched in 2000, and Sir Richard Branson stated that the company would likely sell about 24,000 vehicles in its first year. However, ‘Virgin Cars’ only sold 2,000 vehicles during the 2000-01 financial quarters. In 2001, the venture launched its subsidiary ‘Virgin Bikes’. However, by 2003, the company made only 12,000 sales. In 2005, it collapsed.

Zero Return From Online Music Market

‘Virgin Digital’ first appeared in 2005 and was intended to compete with Apple’s iTunes, through subscription services. The business only lasted till 2007 and couldn’t supersede iTunes’ popularity. ‘Virgin Pulse’, another music player similar to the iPod, also met the same fate.

The ‘Virgin America’ Horror

Virgin Atlantic, which is a successful aviation company, had a US-based subsidiary called ‘Virgin America’. Established in 2007, ‘Virgin America’ intended to be a low-cost carrier primarily servicing the West Coast. It eventually became defunct after being bought out by Alaska Airlines in 2018.

The post IF Insights: Virgin Orbit bankruptcy & the saga of Sir Richard Branson’s business failures appeared first on International Finance.

US financial regulators have rolled out emergency measures to arrest the aftereffects of the crisis. The bank depositors will now get access to their money. Other banks will also be able to borrow from the Federal Reserve for 2024, as long as the loans are matched by safe government securities.

US Treasury chief and veteran economist Janet Yellen, however, decided not to compare the situation with the 2008 financial crisis, when the collapse of large banks threatened to bring down the global financial system.

Understanding The Gravity Of The Crisis

Silicon Valley Bank had assets valued at USD 212 billion and these were primarily lent to tech start-ups.

The bank has been placed under the Federal Deposit Insurance Corporation (FDIC) control, with the latter guaranteeing deposits of up to USD 250,000 for the affected parties.

Silicon Valley Bank’s woes have also resulted in the downfall of the values of other US regional financial institutions. New York-based Signature Bank has been shut down by the FDIC. The regulatory body has also taken control over the bank’s USD 110.36 billion worth of assets and USD 88.59 deposit storage (as per December 2022 stats).

First Republic Bank, Western Alliance and PacWest too have been affected by the crisis.

In the United Kingdom, HSBC will take over SVB’s operations in the country. This will override the Bank of England’s initial decision to place the entity into insolvency, apart from protecting the finances of the bank’s 3,500 customers, including hundreds of tech start-ups.

Crypto company Ripple Labs had “business exposure” to Silicon Valley Bank but remains in a strong financial position, clarified CEO Brad Garlinghouse. Ripple, currently engaged in a lawsuit with the United States Securities and Exchange Commission (SEC) over the status of the cryptocurrency XRP, had reportedly stored some of its cash reserves at the Silicon Valley Bank.

What Went Wrong For SVB?

As the world went into COVID lockdowns in 2020 and 2021, remote working became a part of the mainstream economy. This resulted in the rise in the fortunes of tech start-ups, as companies bet big on technology to keep their operations going amid business disruptions.

The tech companies used Silicon Valley Bank for payroll and other monetary services and the bank received an influx of deposits. SVB used the investors’ money in US government bonds, including those supported by mortgages. The prices of these bonds generally go down when the Federal Reserve hikes interest rates. As the Joe Biden government started its monetary policy tightening in 2022 beginning, it resulted in SVB’s bond portfolios undergoing value losses.

The only feasible option for the bank would have been to hold onto these bonds till their maturity stage, in order to get the capital back.

As the tech sector went into a financial bloodbath in 2022, SVB’s customers reportedly started drawing on their deposits. The bank sold some of its bonds at massive losses.

On March 8, 2023, it announced a USD 1.75 billion round of capital raising, while informing its investors about the need to ‘plug a hole’ caused by the sale of its loss-making bond portfolio.

However, aware of SVB’s mess, its customers started withdrawing money en masse, which was reportedly stored in larger accounts.

On March 10, the collapse finally happened. It is now the largest bank failure in the United States since the 2008 global financial crisis.

Revisiting The 2008 Mess

In 2007, global financial markets started showing signs of the negative fallouts of the cheap credit binge. Not only did two Bear Stearns hedge funds collapse, but BNP Paribas also warned investors that the latter might not be able to withdraw money from the bank’s funds. British bank Northern Rock reportedly mulled emergency funding from the Bank of England.

However, only a few investors could anticipate the onset of the worst crisis in nearly eight decades, which brought Wall Street’s giants, triggered the Great Recession and cost people their jobs, savings and homes.

The 2008 financial crisis began with cheap credit distribution and relaxed lending standards, along with years of low interest rates, fuelling the creation of a housing bubble. As it burst, banks were left holding trillions of dollars of worthless investments in subprime mortgages.

The Federal Reserve lowered its rates from 6.5% (in May 2000) to 1% (in June 2003), in order to boost the US economy by making money easily accessible to businesses and consumers.

The move resulted in an upward spiral in home prices. Subprime borrowers, those with poor/no credit history, were also able to buy homes.

The lenders then sold these loans on to Wall Street banks, which, in turn, packaged these entities into low-risk financial instruments such as mortgage-backed securities and collateralized debt obligations (CDOs). The whole chain created a big secondary market for originating and distributing subprime loans.

The US Securities and Exchange Commission (SEC) in October 2004 relaxed the net capital requirements for Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns, and Morgan Stanley, thus freeing the latter to leverage their initial investments by up to 30/40 times.

Eventually, interest rates rose and homeownership reached a saturation point. In 2006, the Fed rate was revised at 5.25% and it remained as it is until August 2007. By 2004, US homeownership peaked at 69.2% and by 2006, home prices started going down. The US homeowners couldn’t sell their properties, as they owed a high amount of money to their lenders. Subprime borrowers were stuck with mortgages beyond their payment capacities.

In 2007, subprime lenders went into a bankruptcy spree. Bear Stearns stopped redemptions in two of its hedge funds, prompting banking giant Merrill Lynch to seize USD 800 million from the funds. Northern Rock had to approach the Bank of England for emergency funding due to a liquidity problem. In October 2007, Swiss bank UBS announced losses worth USD 3.4 billion from subprime-related investments.

By 2008, the United States and world economies entered the recession phase, and financial institutions’ got surrounded by liquidity struggles. Northern Rock got nationalised. Bear Stearns collapsed and was taken over by JPMorgan Chase. IndyMac Bank too failed. Two of the United States’ biggest home loan lenders Fannie Mae and Freddie Mac, were seized by the government. The crisis reached its zenith with the downfall of Lehman Brothers in 2008 September.

The post Silicon Valley Bank collapse: Ghost of 2008 crisis haunts US economy again appeared first on International Finance.

However, there were still significant shortages at its worldwide and U.S. crypto exchanges, according to FTX, which claimed to have recovered more than USD 5 billion in cryptocurrency, cash, and liquid securities. FTX said that some of the shortfalls were caused by cyberattacks, claiming that since it filed for bankruptcy on November 11, there had been USD 323 million in cryptocurrency stolen from its international exchange and USD 90 million stolen from its U.S. exchange.

Later, in a blog post, indicted founder Sam Bankman-Fried disputed some study elements.

Sam Bankman-Fried disputed FTX’s calculations, claiming that the company’s attorneys at Sullivan & Cromwell had provided an “extremely misleading” picture of the company’s finances. Sam Bankman-Fried is suspected of stealing billions of dollars from FTX customers to pay debts incurred by his crypto-focused hedge fund, Alameda Research.

According to Sam Bankman-Fried, FTX has more than enough cash to pay back U.S. clients who, in his “best guess.” are due somewhere between USD 181 million and USD 497 million. However, since leaving his position as CEO in November, Sam Bankman-Fried has yet to have access to FTX documents.

A Sullivan and Cromwell spokeswoman declined to comment. However, in a recent court filing, the firm’s lawyers stated that they had rejected Sam Bankman-Fried’s attempts to continue participating in the bankruptcy procedures for the business.

Sam Bankman-Fried will go on trial in October after entering a not-guilty plea to the fraud accusations against him.

In addition to failing to reply to inquiries on Sam Bankman-Fried’s blog post immediately, FTX needed to estimate how much was owed to either its domestic or international clients.

A few days back, FTX published more information regarding its recovery efforts, stating that it has recovered USD 1.7 billion in cash, USD 3.5 billion in liquid bitcoin, and USD 300 million in liquid securities. Ray said in a statement that we are making headway in our attempts to maximize recoveries.

Based on cryptocurrency prices on November 11, 2022, the recovered crypto assets total USD 685 million in Solana, USD 529 million in FTX’s proprietary FTT token, and USD 268 million in bitcoin. Sam Bankman-Fried praised Solana, but it lost most of its worth in 2022.

FTX’s initial inquiry into system hacks revealed a Securities Commission of the Bahamas asset seizure in November, which sparked a conflict between FTX’s bankruptcy team in the United States and Bahamian regulators.

Ray had recently announced that the Bahamian government was holding USD 426 million for creditors as a result of the two parties’ resolution of their differences in January.

During a discussion at the Atlantic Council in Washington, Bahamas Prime Minister Philip Davis brought up the conflict. He said Ray’s team had “come around” and agreed that the Bahamian asset seizure “was appropriate and perhaps has saved the day for many of the investors in FTX.”

The post Sam Bankman-Fried says FTX US is solvent appeared first on International Finance.

The New Jersey-based company advertised itself mainly to small investors, providing them with crypto accounts with high interests, apart from giving out quick loans without performing credit checks. It had more than 450,000 retail customers as of 2021.

BlockFi, established in 2017, filed for Chapter 11 protection in New Jersey. Its collapse added more misery to the sector, which is already affected by the news of frequent bankruptcies, staff downsizing, and operational shutdowns.

BlockFi also informed the bankruptcy court that it was “the antithesis of FTX” and would seek to return customer funds as early as it can.

Another digital assets’ bank, Silvergate Capital Corporation, which provides innovative financial infrastructure solutions to companies with its real-time payments platform SEN, said that it hasn’t been severely affected by BlockFi’s downfall. It even said that the crisis-hit crypto exchange was “not a custodian of its Bitcoin-collateralized leverage loans”, adding that its business ties with the company were limited to less than USD 20 million of its total deposits from customers which stood at USD 13.2 billion in 2022 third quarter.

BlockFi’s competitors, Celsius Network and Voyager Digital, filed bankruptcy pleas in July.

Simultaneously, cryptocurrency volatilities have mostly been in the negative zone, with Bitcoin alone losing 20% of its value in a single week.

While BlockFi made a contract with FTX in June to stabilize itself, it was considered a safety net at the time, given the exchange’s reputation. BlockFi also got a USD 400 million credit line from FTX. The agreement also had an option for FTX to purchase BlockFi.

BlockFi then obtained a USD 275 million loan from an FTX affiliate. Thanks to this interdependence, BlockFi went bankrupt too as FTX collapsed.

BlockFi informed customers that they couldn’t withdraw their deposits after the exchange failed due to its “significant exposure” to FTX.

BlockFi’s bankruptcy application stated that it had USD 257 million of cash support for its current operations. It has over 100,000 creditors and USD 10 billion in assets and liabilities. Some 850 individuals worked in the exchange as of 2021.

BlockFi also stated that it would concentrate on collecting any debts owed to the business, including those owed by FTX. However, given the exchange’s insolvency, it issued a warning about delays in recouping assets from FTX.

FTX’s corporate turmoil, according to the company’s new CEO John J. Ray III, is “unprecedented.” Experts fear that the unraveling and retrieving of assets may take years.

Coming back to BlockFi, its lending arm and the Securities and Exchange Commission settled for USD 100 million in 2022 February over the exchange’s failure to register as an investment company, apart from its inability to register loans as securities. BlockFi also “misrepresented” the degree of risk in its loan operations.

BlockFi still owes the SEC USD 30 million, making the SEC its fourth-largest creditor. It has a USD 275 million debt to BlockFi’s second-largest creditor, West Realm Shires, the parent company of FTX’s American exchange. Ankura Trust Co., a company specializing in handling loans for struggling businesses, is the fallen exchange’s largest creditor, with around USD 729 million.

BlockFi is owned by Valar Ventures, which is partly supported by tech tycoon Peter Thiel.

BlockFi’s financial adviser Mark Renzi of Berkeley Research Group stated the company “has worked to positively shape the cryptocurrency industry and advance the sector” since its start.

The law firm Haynes and Boone, the investment bank Moelis & Co., and the strategy advisor C Street Advisory Group are among BlockFi’s additional bankruptcy advisors.

Will Pension Funds’ Crypto-Related Investments Get Affected?

A public pension fund stands by its sizeable commitment to crypto-related holdings as investors hurry to assess the FTX fiasco effects, along with the broader price drop of digital currencies.

According to a person familiar with the fund, the Fairfax County Police Officers Retirement System, a defined-benefit pension plan covering law enforcement officers in northern Virginia, has over 7% of its assets invested in crypto-related holdings.

Katherine Molnar, the fund’s chief investment officer, said on a panel organized by the blockchain advocacy group Chamber of Digital Commerce, “I’ve been really happy about how we’ve thought about it and how we’ve approached” investments related to cryptocurrencies.”

She also wrote in a recent email to a consultant who had enquired about the pension fund’s cryptocurrency exposure that “the washing out of weak players or potentially inappropriate actors-while causing volatility and is admittedly stressful-is ultimately a healthy thing.”

Katherine Molnar has managed USD 1.8 billion in assets for the benefit of more than 2,700 current and retired participants as of 2021. Molnar stated in the same email that the fund had no direct exposure to FTX.

The consultant who questioned Molnar about the cryptocurrency holdings of the Fairfax police pension is John Reed Stark, a critic of the industry and the former director of the Securities and Exchange Commission’s Office of Internet Enforcement.

After his email conversation with Katherine Molnar, John Reed Stark stated on LinkedIn, “To me, this is perhaps the most reckless investment” made by a public fund in years.

According to John Reed Stark, “FTX’s contagion has just started to spread.”

“You’re standing inside a burning building and thinking everything’s going to be okay,” he remarked, interpreting Katherine Molnar’s position.

Other public pension funds, which have invested in crypto assets in addition to the Fairfax police fund, have typically modest percentages. The Fairfax County Employees Retirement System, sister fund of the Fairfax Police Pension Fund, holds similar crypto assets. The Houston Firefighters’ Relief and Retirement Fund earlier disclosed its investments in bitcoin and ether.

According to Russell Kamp, managing director at investment firm Ryan ALM, defined benefit pensions “are too critically important to the participants to use precious resources to engage in these risky strategies.”

The US Department of Labor advised 401(k) plans to “exercise extreme caution” before introducing bitcoin options to their investment menus earlier this year. However, state and municipal laws govern most of the regulation of public pension schemes.

According to analysts, the effect of the crypto turmoil on public pension funds may not be fully understood presently, as these funds frequently invest through private vehicles with hard-to-value holdings.

As per Katherine Molnar, Fairfax police pension fund began investing in crypto projects about 4.5 years ago. The scheme is underfunded and appears unlikely to achieve its return objectives in conventional stocks and bonds.

According to her, some trustees had doubts about the decision. She added that there were “definitely concerns about ‘is this money laundering?'” concerning the transaction and that the vote to accept it “wasn’t unanimous.” She manages money for police officers. She added that, over time, “virtually everything will be digitized,” from bonds and mortgages to driver’s licenses and medical records.

The goal weighting for digital assets in the fund is 4.75%; however, due to the fund’s exceptional early performance, the allocation has increased to nearly 7%.

Katherine Molnar also stated that the fund has made nine crypto-related investments so far and evaluated several warning signs as well.

“You may not have heard of the auditor of the fund you’re looking at before. Likewise, you probably wouldn’t invest with a manager who had an auditor that you’d never heard of before in any other area. We all need to have an open mind,” she remarked.

The post BlockFi bankruptcy impact: Focus now on pension funds’ crypto commitments appeared first on International Finance.

Being forced to shut down within three years of its launch, Bitfront, backed by Japan-based LINE Corporation, will now focus on the blockchain and token economy areas.

In a public notification, the exchange remarked, “despite our efforts to overcome the challenges in this rapidly-evolving industry, we have regretfully determined that we need to shut down BITFRONT in order to continue growing the LINE blockchain ecosystem and LINK token economy.”

It has now stopped new sign-ups and credit card payments and will wind up its operations by early 2023.

Headquartered in San Francisco Bay Area, Silicon Valley, and West Coast, Bitfront used to be the main exchange platform for the core products in Line’s blockchain business. It was driven by the contribution-rewarded business model, while acting as the exclusive platform for listing digital tokens based on the “Line Blockchain Platform” and for trading Line’s digital tokens with other major tokens.

LINE entered the crypto market in 2019 with Bitmax and launched Bitfront as a global exchange in 2020. It also launched a cryptocurrency called Link, before the parent firm was merged with Yahoo Japan in 2021. In 2022, LINE also launched an NFT trading platform LINE NFT, which will remain operational.

Bitfront’s closure dampens the crisis-hit crypto sector even further

The Crypto sector’s liquidity crisis began in 2022 May, as entities like Terra Sisters, and Three Capital Arrows shut down their operations. The Terra crisis wiped out billions of dollars of wealth and forced many exchanges to eventually opt for bankruptcy.

Bitmex, Coinbase, Celsius Network, Vauld, eToro, Voyager, Blockchain.com, SkyBridge Capital, name any company dealing in crypto-related commitments, one thing will be common, and they all are going through financial hardships. Despite touching highs like buying Super Bowl advertisements in the United States and crypto getting legalized in Brazil as a payment mode, the sector, in the last few months, has only generated low investors’ confidence, with digital currencies facing acute negative volatility.

And then came the FTX Group’s bankruptcy in November which sent shockwaves through the markets, with many other exchanges getting affected by it.

Bitfront, while justifying its closure decision, said, “from the beginning, we have done our best to be a leader in the blockchain industry. This decision was made for the best interest of the LINE blockchain ecosystem and is unrelated to recent issues related to certain exchanges that have been accused of misconduct.”

It will suspend additional deposits and interest payments of LN/LN interest products on December 12, apart from paying the customer interests against deposits from December 5 to 11. By December 30, the exchange will suspend crypto, and USD deposits. By March 31, 2023, customer withdrawals will be suspended too, after which the US customers can claim their assets in their states, while their global counterparts will be allowed to do the same in Delaware.

After that, the customer’s data will be wiped off the crypto platform by April second week.

FTX, which was the latest crypto exchange to fall, collapsed because of a sudden sell-off by investors over reports about Alameda capital’s massive debt with FTT as collateral. Amidst the chaos, about $1 billion of client funds have also gone missing, aggravating the mess left behind by SBF. Bitfront’s move to shut shop in a stepwise manner with assurances to clients could be aimed at avoiding a sudden crash

Since FTX lacked a graded business exit plan, the matter turned into chaos, as investors withdrew their money from the exchange in record numbers, in turn, leading to a situation where the value of the FTT token dropped by some 75% in just 24 hours. Currently, the assets under management have reached two years low of USD 22 billion. What Bitfront did here is giving investors enough time to withdraw their capital from its exchange, to prevent another crypto bloodbath.

FTX, at its prime (2020-21) acquired Blockfolio, a cryptocurrency portfolio tracking app, for USD 150 million, followed by a raising of USD 900 million at a USD 18 billion valuation from over 60 investors, including Softbank, Sequoia Capital, and other firms. In 2022, before bankruptcy, it announced a USD 2 billion venture fund named FTX Ventures, which raised some USD 400 million in funding at a USD 32 billion valuation that month. The company also had a plan of offering stock trading to its US customers, apart from coming up with a gaming division, which would have helped developers to add cryptocurrency, NFTs, and other blockchain-related assets into games. Also, before heading into bankruptcy, FTX.US won the auction to acquire the digital assets of bankrupt crypto brokerage Voyager Digital.

Post the FTX scandal, entities such as Tiger Global Management, the Ontario Teachers’ Pension Plan, SoftBank Group, BlackRock, Lightspeed Venture Partners, Temasek, and Sequoia Capital are all staring at financial crises. Sequoia Capital has lost some $214 million. SkyBridge Capital is now Anthony Scaramucci attempting to buy back a 30% stake in an FTX-owned business.

FTX itself has shown a massive USD 9 billion in liabilities and just USD 900 million in assets while owing almost USD 3.1 billion to its top 50 creditors.

Bitcoin, Solana, Tether, and Etherium have been witnessing negative volatility, making cryptocurrency a sort of high-risk investment prospect right now. Since FTX was one of the world’s biggest crypto trading platforms, it developed an interconnected network with many small and medium companies in the digital currency sector, and right now, any of these having material exposure/business link with the defunct exchange is struggling financially. BlockFi, which filed for bankruptcy on the same day Bitfront did, has an outstanding USD 275 million loan to FTX US, along with other liabilities and assets ranging from USD 1 billion to USD 10 billion.

And the ones which didn’t have ties with FTX, are struggling as well, as the investors, in general, are fearful about the possibility of these companies going into bankruptcy as well. Despite repeated assurances from the crypto leaders, the trend of withdrawing capital across exchanges is increasing with every passing day. In this environment, Bitfront’s closure has done more harm to the sector.

The post Bitfront goes bankrupt: No end in sight for the harsh ‘crypto winter’? appeared first on International Finance.

The episode involving FTX and Alameda Research has sent the sector into chaos. Wealth and customer confidence both have been eroded from the market. When FTX filed for bankruptcy, it had less than USD 1 billion in easily sellable assets against liabilities worth USD 9 billion.

Ether, the second-biggest cryptocurrency, witnessed a 7% plunge in the market, before rebounding again. As per Elliptic, a blockchain forensics firm, USD 477 million worth of crypto assets were taken away from the FTX exchange.

All these disturbing developments put one question right away: Is the crypto industry in deep crisis? Is the bubble around it going to burst finally?

Understanding Crypto Bubble
The cryptocurrency bubble is a concept where the market considers the scope of digital currencies’ growing prices getting inflated against the assets’ hypothetical value. Basically, the business is all about speculation.

And yes, like any other bubble, this one bursts too and yes, they have happened.

The first one happened in 2018, known as the ‘Bitcoin Crash’ or the ‘Great Crypto Crash’. While Bitcoin prices fell by 65%, all the other digital currencies followed a similar trend. By 2018 September, the crypto sector’s crash figure reached a mammoth 80%. MVIS CryptoCompare Digital Assets 10 Index lost 80% of its value. November 2018 saw bitcoin’s market capitalization falling below the USD 100 billion mark for the first time since October 2017.

From USD 4,000, bitcoin reached a low of USD 3,100, as the year ended.

The entire crisis unfolded by a CBSNews article, dated January 2018, which flagged a ‘fraud’ in the crypto market, citing the UK-based BitConnect’s example. The company received a closure notice from the Texas State Securities Board. While BitConnect promised very high monthly returns to its investors, it didn’t get its business registered with the regulators, thereby bringing its demise.

Post-2020 Scenario
In March 2020, Bitcoin price fell by 30% from USD 8,901 to USD 6,206, and by October of that year, it again touched a high of USD 13,200. In November, it surpassed its previous all-time high of more than USD 19,000. In January 2021, from a high of USD 34,792.47, bitcoin again crashed by 17%. However, it recovered subsequently and traded above USD 40,000 and reached the USD 50,000 mark on 16th February 2021. October 20 saw the currency reaching its new high of USD 66,974. In total, the price boom has been around 700% since 2020 March 2020.

However, there was a small blip in April 2021, as bitcoin came down below USD 49,000, registering a 23% crash and wiping off half a trillion dollars from the market. However, it failed to dampen the investors’ spirits as Coinbase went public on the NASDAQ that year, witnessing a share growth of over 31%, as their market cap rose to USD 85.8 billion. Dogecoin saw its value increase to 20,000% in 2021 alone.

However, in May 2021, Bitcoin dropped by 30% to USD 31,000, followed by Ethereum (40%), and Dogecoin (45%). Major crypto exchanges too saw a downfall after billionaire Elon Musk’s announcement that Tesla won’t use Bitcoin payments, followed by the People’s Bank of China saying that cryptos can’t be used for payments.

After Elon Musk met the bitcoin sector players, the market saw another boom in 2021 September, with Bitcoin reaching USD 52,633.54 and Ethereum growing by over 100% to USD 3,952.13. Both currencies, in November, had a total market worth of USD 72,378.92. NASDAQ peaked at 16,057.44. Bitcoin’s value grew by over 1,200% and Ethereum spiked by 4,000%. Around the same point in time, Bitcoin became a legal tender in El Salvador.

Heading Into 2022, It Goes Into Crisis Again
By end of 2021, Bitcoin and Ethereum saw a downfall in their values again. Till April 2022, Bitcoin swung between USD 35,000 and USD 48,000. While four crypto companies purchased super bowl ads, Coinbase became one of the most downloaded mobile apps. These were the only highs the sector saw.

Bitmex laid off 25% of workers. Coinbase’s shares went down by 80%. Celsius Network and Babel Finance halted their operations. Crypto.com and Coinbase too went for staff downsizing.

Crypto hedge fund Three Arrows Capital has defaulted on a $670 million loan from another broker Voyager Digital.

Small players such as Vauld, eToro, and Voyager Capital are struggling as well.

Ethereum Max, SafeMoon, LGBcoin, Coinbase, and Binance are facing lawsuits as well, and now comes the FTX crisis.

Crypto Market In Bad Shape Now
As per a report from the Crypto New Flash, Bitcoin’s value plunged below USD 16,000 in November 2022.

While external factors such as the Russia-Ukraine war and global economic slowdown affected the sector, the latest downfall has been mostly triggered by the FTX Exchange crash. FTX used to carry daily transactions of nearly USD 1 billion, so the impact has been a major one.

Celsius Network too collapsed in June this year, sending the market into negative volatility as Bitcoin prices fall below USD 20,000. Apart from Russia and China’s hostile policies against crypto, massive token sell-offs have impacted the sector as well.

Fortune.com cited Bank of America Research data and said that the fall in Bitcoin price is the fifth largest on record.

After touching the high of USD 70,000 in 2021 November, Bitcoin has been falling and the FTX fiasco has accelerated it further, with the overall crypto market cap plummeting from USD 3 trillion to USD 900 billion.

It’s State Vs Crypto?
The United States has been witnessing a lot of lawsuits against crypto firms. Even China and Russia seem hostile to the sector.

While the financial regulators’ actions from these countries have negatively affected the crypto prices, Elon Musk being vocal about the environmental impact of crypto mining didn’t help matters either.

Now, the whole FTX crisis has taken a political turn, with the US republican lawmaker Tom Emmer accusing the Securities and Exchange Commission (SEC) of siding with the crypto exchange’s former CEO Sam Bankman-Fried.

The Ripple vs SEC lawsuit saw the blockchain firm failing to avoid the regulatory agency’s glare, despite having business ties with conventional banking networks. And yes, the SEC has been accused of ‘harassing’ crypto companies before.

Road Ahead For Crypto Industry
A falling bitcoin has wiped off investor portfolios worth USD 2 trillion, as per the reports. While most of the hedge funds and corporates have lost their money, individual retail investors haven’t been spared either.

Many critics have pointed out the lack of accountability from the industry in general and yes, they are right. At least the FTX episode validates their concerns. Incidents like layoffs, bankruptcy, and lawsuits have sent the customer confidence level to a low. Indeed, a tough winter is awaiting the industry players. A combination of new, tough regulations and a bit of honesty from the companies is what the sector needs right now.

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