A Crypto Bank Run ... "Except There's No Bank"

Rethinking Insider Trading Compliance Policies in Light of the SEC’s New “Shadow Trading” Theory of Insider Trading Liability

To me, the most interesting question raised by the Panuwat case, and the problem of shadow trading more generally, is why would Medivation (or any company) adopt such a broadly worded insider trading policy? How did this broad proscription on employee trading benefit Medivation’s shareholders?

Medivation’s shareholders could not have been harmed by Panuawat’s trading. Such trading could not affect Medivation’s stock price, nor could it put the acquisition in jeopardy. So why is the blanket proscription against trading in “another publicly traded company” in the policy at all? The final sentence of the policy as quoted above suggests that the drafters were under the impression that such trading would be illegal under the securities laws. This may be true under the misappropriation theory, but only because Medivation chose to make it so by including the language in the policy….

Jury takes fraud case against Elizabeth Holmes’s ex-partner

The fate of hard-nosed technology executive Ramesh “Sunny” Balwani is now in the hands of a jury that will weigh criminal charges alleging he joined disgraced Theranos CEO Elizabeth Holmes, his former partner, in an elaborate fraud that jarred Silicon Valley.

U.S. District Judge Edward Davila handed the case to the jury Friday afternoon after federal prosecutors in San Jose, California, finished a rebuttal to more than 11 hours of closing arguments methodically laid out by one of Balwani’s lawyers, Jeffrey Coopersmith.

Crypto’s biggest critics won’t back down

According to Diehl, the crypto industry is reinventing the financial catastrophes of the past. Crypto is like early days, he argues: specifically, the wildcat banking of the 19th century, when small banks outside of federal regulation in the US issued paper cash without enough gold or silver to back it. It made for an unstable system where a simple rumor about the lack of liquid assets could cause a run on the bank. Diehl pointed to stablecoins as an example of parallels with wildcat banking, referring specifically to the Terra Luna crash. The TerraUSD stablecoin promised to be a “safe and happy” way to bank a 20% yield, as long as the coin stayed pegged to the dollar. But it didn’t stay pegged, the value plummeted, and the project wiped out about $40 billion from the crypto market. The Wall Street Journal described the event as a “crypto bank run.” (Weeks after Diehl’s comment to Morning Brew, crypto lender Celsius also faced a bank run, “except there’s no bank,” as Fortune reported.)

Goldman Sachs Leading Investor Group to Buy Celsius Assets: Sources

Goldman Sachs is looking to raise $2 billion from investors to buy up distressed assets from troubled crypto lender Celsius, according to two people familiar with the matter.

The proposed deal would allow investors to buy up Celsius’ assets at potentially big discounts in the event of a bankruptcy filing, the people said.

Goldman Sachs appears to be gauging interest and soliciting commitments from Web3 crypto funds, funds specializing in distressed assets and traditional financial institutions with ample cash on hand, according to a person familiar with the situation. The assets, most likely cryptocurrencies having to be sold on the cheap, would then likely be managed by participants in the fundraising push.

Hackers Steal $100 Million by Exploiting Crypto’s Weak Link

Hackers looted about $100 million from a so-called cryptocurrency bridge, again exposing a key vulnerability in the digital-asset ecosystem.

Blockchain Harmony said in a tweet that the hack of its Horizon bridge, which lets people swap coins between different blockchains, took place Thursday morning. It has “begun working with national authorities and forensic specialists to identify the culprit and retrieve the stolen funds.”

Cryptocurrency Bear Market: This Bitcoin Crash Is Different From the Past – Bloomberg

For a generation of alienated techies, crypto’s all-for-one ethos was its biggest draw. Now panic is spreading across this universe — and that same ethos is posing what may be the biggest threat yet to its survival.

What started this year in crypto markets as a “risk-off” bout of selling fueled by a Federal Reserve suddenly determined to rein in excesses has exposed a web of interconnectedness that looks a little like the tangle of derivatives that brought down the global financial system in 2008. As Bitcoin slipped almost 70% from its record high, a panoply of altcoins also plummeted. The collapse of the Terra ecosystem — a much-hyped experiment in decentralized finance — began with its algorithmic stablecoin losing its peg to the US dollar, and ended with a bank run that made $40 billion of tokens virtually worthless. Crypto collateral that seemed valuable enough to support loans one day became deeply discounted or illiquid, putting the fates of a previously invincible hedge fund and several high-profile lenders in doubt.