Crypto

Crypto Swindler Sam Bankman-Fried Has Scored a Big Win From Behind Bars

Published

2 years ago

January 3, 2024

Crypto Swindler Sam Bankman-Fried Has Scored a Big Win From Behind Bars

The cryptocurrency industry landed one of its most desired prizes last month when regulators at a small but potentially pivotal federal agency allowed a little-known cryptocurrency company to oversee all aspects of brokering, facilitating, and clearing trades of its digital assets.

Regulators and experts say the move, which came after millions were spent in lobbying in 2023 alone, could endanger customer assets and stifle competition, as well as set a dangerous precedent that could set up this and other financial markets for spectacular collapse.

The December 13 approval of the application from Bitnomial, a small Chicago-based crypto derivatives company, is the first time the Commodity Futures Trading Commission (CFTC) has approved any financial institution to vertically integrate as an exchange, broker, and clearinghouse, without doing so through company acquisitions.

In most financial markets, the responsibilities for different functions are handled by separate entities to prevent conflicts of interest and ensure market stability. One entity runs the exchange where financial instruments are traded; another is a broker which performs transactions on behalf of clients; and another clears, or validates, the transactions before they go through.

The approval of Bitnomial’s application comes after years of cryptocurrency interests — most prominently, convicted financial fraudster Sam Bankman-Fried — cozying up to CFTC regulators and pushing to ensure all federal crypto regulations are handled by the commission. The CFTC’s limited size and funding could lead to laxer oversight, compared to regulations from the much more aggressive and powerful Securities and Exchange Commission (SEC).

Now, with the Bitnomial approval, experts told the Lever that a precedent has been set that could allow more companies under CFTC oversight to vertically integrate into massive financial firms that could be susceptible to collapse.

“It’s a pretty big deal that’s flying under the radar, and it came up as a surprise at year end,” Dennis Kelleher, president and CEO of consumer advocacy group Better Markets, told the Lever. “Although it’s no surprise that the crypto-friendly CFTC chairman Rostin Behnam would do this without much advance notice — ramming something through that’s crypto friendly at year end, that’s not a surprise.”

One CFTC commissioner who voted against the approval criticized her colleagues for rushing through the five-member commission’s first-ever vertical integration approval.

“We are in the middle of a public consultation on vertical integration and concerns with vertical integration have been expressed by the White House . . . Treasury Secretary Janet Yellen and other banking regulators,” said CFTC commissioner Christy Goldsmith Romero in a December 13 press release. “I do not understand why the Commission would rush to register this small start-up company, thereby setting precedent, without completing the analysis that we are in the middle of right now.”

Bitnomial says it did not pursue its application to “create a vertically integrated entity,” and that it still plans on working with multiple brokers. Bitnomial also claims its application did not receive an expedited process.

“The application wasn’t rushed,” a Bitnomial spokesperson told the Lever. “As was pointed out by CFTC staff in the public meeting, the application was first recommended for approval in early 2023 and the commission contemplated it so long that their statutory [180-day] deadline lapsed, at which point Bitnomial agreed to extend the deadline. Bitnomial is seeking this approval to expand digital asset support and access given how nascent the regulated digital asset derivatives market is in the US”

The CFTC, which was originally established in 1974 to oversee agricultural futures contracts, has been called the “Achilles Heel” of the 2010 Dodd-Frank Act because it was handed oversight of the massive US derivatives market, including all financial options, swaps, and futures, after the 2008 financial crisis.

In 2022, the CFTC had an operating budget of just $332 million and 743 full-time employees, compared to the SEC, which oversees the stocks and bonds markets and had a 2022 budget of nearly $2 billion dollars and more than forty-five hundred full-time employees.

The crypto industry has worked diligently over the years to make the CFTC the sole regulator of digital assets. It’s why the fight over the definition of cryptocurrencies has become heated; some regulators view it as a security, similar to a stock or bond, which would likely bring it under the purview of the SEC, while others view it as a commodity, like grain or oil, which would place its regulation under the CFTC.

The CFTC has developed a congenial relationship with the crypto industry — and in particular Bankman-Fried, the disgraced former CEO of the massive crypto exchange FTX, which collapsed in November 2022. Bankman-Fried played a pivotal role in glorifying crypto and lobbied the CFTC before he was arrested and ultimately found guilty on seven counts of felony fraud and money laundering in November. His sentencing hearing is scheduled for March 28, where he faces more than a hundred years in prison.

Before his criminal activity was discovered, Bankman-Fried and his associates were able to obtain same-day meetings with CFTC chair Behnam, thanks to the connections and efforts of former CFTC regulators that FTX hired as top deputies.

Behnam, a former equities trader and congressional advisor, was appointed to the CFTC in 2017 by former president Donald Trump. He was reappointed to the position in 2021 by President Joe Biden and elected chair by his co-commissioners.

Bitnomial’s application is similar to one that Bankman-Fried was pursuing for FTX, which was to allow the company to consolidate the exchange, broker and clearinghouse functions for the digital assets it managed. The FTX application sought to change how derivatives markets and clearinghouses operate; the Bitnomial application was less ambitious, Kelleher said.

“[Bitnomial’s approval] not only allows crypto firms to get bigger, but it positions them to get connected to the core of the financial system, where when they get in trouble, like dominoes, they could have knock-on effects on the traditional banking and financial system, which could lead to crashes and bailouts,” Kelleher said.

Bitnomial, founded in 2014, is a relatively small company with just $1.7 million in total assets, and its application was not given a public comment period, like the one FTX underwent, when it submitted its application in April 2022.

Instead, in June 2023, the CFTC issued a Request for Comment for an obscure process, called “Impact of Affiliations of Certain CFTC Registered Entities,” to consider the potential issues that may arise from vertical integration under CFTC regulation. The CFTC received over 160 comments during this process, many of which warned of the potential risks associated with vertically integrated financial institutions.

“The CFTC should have put the Bitnomial application out for public comment and it should have taken that information and the information submitted in response to the ‘Impact of Affiliations of Certain CFTC Registered Entities’ all into account before it took action . . . and allowed the dangerous affiliations presented in the Bitnomial application,” Kelleher said.

CFTC commissioner Goldsmith Romero expressed similar concerns.

“We received so many comments expressing serious concerns about conflicts of interest risk, risk of customer harm, anti-competitive risks, contagion risk, financial stability risks, and systemic risk,” she said in her December 13 press release. “That means the stakes are high if we get this wrong.”

Steven Adamske, a senior spokesperson for the CFTC, declined to comment on Commissioner Goldsmith Romero’s comments suggesting the application was rushed through.

“The Bitnomial Application has been with the commission for over a year where we have a statutory deadline to act within a certain period of time,” he said. “I would point out, however, that the application has been under consideration for over a year and that in Commissioner Goldsmith Romero’s December 18 statement, she notes she was prepared to vote against the application in May.”

He also noted the Commodity Exchange Act and the Commission’s own recommendations do not require a public comment period for the type of application Bitnomial submitted.

Although the company is small, Bitnomial has deep-pocketed investors, including investment firm Franklin Templeton and crypto exchange Coinbase. Both companies have spent more than $3.7 million combined lobbying Congress, the CFTC, the White House, and other federal entities on crypto and additional issues in 2023 alone, disclosures show.

Kelleher, the president of Better Markets, said Bitnomial’s application would never have been approved by the SEC because securities law prevents this type of consolidation. He added that the consolidation is similar to the market structure that was allowed right before the stock market crash of 1929, preceding the Great Depression.

Kelleher added that it was this structure — one entity acting as an exchange, broker, and clearinghouse — that also caused the collapse of FTX, even though the arrangement was illegal to do so at the time.

“They were technically separate entities, but they had common control, which was Sam Bankman-Fried,” Kelleher said. “It illustrates that when you have those conflicts of interest, the pressure to advantage different parts of your business for your own benefit and at the expense of others like investors and customers is overwhelming. And that’s effectively what the CFTC is approving here.”

CFTC commissioner Kristin N. Johnson also warned about the dangers of vertically integrated financial companies, but ultimately voted for the Bitnomial application after she said Bitnomial promised to put consumer protections in place to prevent conflicts of interest.

In a press release explaining his support of Bitnomial’s application, CFTC chair Behnam made no mention of the possible dangers of vertical integration and praised Bitnomial for incorporating changes regarding concerns that arose from the public comments they received.

“Bitnomial has demonstrated compliance . . . [and] this demonstration of compliance is all that is required for registration,” Behnam said in a press release. “Bitnomial has also adopted rules that specifically address potential conflicts of interest associated with having [a vertically integrated company] and a separate, stand-alone policy that addresses potential affiliate conflicts.”

Behnam also said vertically integrated clearinghouses “are not novel structures,” that Bitnomial’s application was standard, and that the Commission should not hold them to a higher standard, “ nor should it require compliance with rules that have not yet been proposed or approved,” Behnam said in a December 18 press release.

But for consumer advocates like Kelleher, the CFTC’s approval of this model represents a “big Christmas present at year end” for the industry.

“I think the bottom line of this crypto application approval is that the action really shows, again, what a weak crypto regulator the CFTC is,” Kelleher said. “And how ill-suited it is to properly regulate a largely lawless financial market like crypto.”

Crypto

BlackRock COO: Cryptocurrency Demand Surpasses Firm’s Expectations, Signaling a Shift in Value

Published

11 hours ago

May 13, 2026

Press Room

BlackRock COO: Cryptocurrency Demand Surpasses Firm’s Expectations, Signaling a Shift in Value

BlackRock Chief Operating Officer Rob Goldstein revealed that demand for cryptocurrency has significantly exceeded the firm’s initial projections, marking a notable shift in institutional sentiment toward digital assets. Speaking during a Binance online stream, Goldstein addressed the market’s reception of BlackRock’s spot Bitcoin exchange-traded fund (ETF), IBIT, and outlined the asset manager’s broader strategic outlook on blockchain-based finance.

Demand Driven by Value Proposition, Not Speculation

Goldstein emphasized that the global demand for IBIT was stronger than anticipated, describing the interest not as fleeting speculative enthusiasm but as a recognition of a new value proposition rooted in emerging technology. He noted that investors are increasingly viewing cryptocurrency as a distinct asset class with potential for long-term portfolio diversification, rather than a short-term trading vehicle. This perspective aligns with BlackRock’s broader push to integrate digital assets into traditional investment frameworks.

Tokenization and the Future of Capital Markets

Goldstein predicted that the tokenization of capital market instruments remains in its early stages, with future growth expected to be measured in multiples rather than incremental percentages. He argued that blockchain infrastructure could fundamentally reshape how assets are issued, traded, and settled, reducing friction and increasing transparency. This view is consistent with growing industry interest in real-world asset (RWA) tokenization, a trend that major financial institutions are beginning to explore.

AI Agents and Digital Rail Transactions

In a forward-looking comment, Goldstein suggested that artificial intelligence agents will eventually conduct transactions directly via digital rails, or blockchain infrastructure, rather than logging into traditional bank accounts. This vision points to a future where automated systems interact with decentralized finance protocols, potentially streamlining operations across supply chains, payments, and asset management. While still conceptual, the statement underscores BlackRock’s attention to the convergence of AI and blockchain technologies.

The Education Gap Remains a Key Obstacle

Goldstein identified the primary barrier to broader adoption as a lack of investor education regarding the technical aspects of virtual assets and efficient portfolio allocation. Many institutional and retail investors remain uncertain about how to evaluate cryptocurrencies, assess risks, and integrate them into existing investment strategies. BlackRock’s emphasis on education suggests that the firm sees informed participation as critical to sustainable market growth.

Conclusion

BlackRock’s acknowledgment that cryptocurrency demand has exceeded expectations carries significant weight, given the firm’s status as the world’s largest asset manager with over $10 trillion in assets under management. Goldstein’s comments reflect a maturing institutional perspective that views digital assets not as a passing trend but as a structural evolution in finance. For investors, the key takeaway is that major financial players are moving beyond skepticism and actively building infrastructure for a tokenized future, even as educational gaps persist.

FAQs

Q1: What did BlackRock’s COO say about cryptocurrency demand?
Rob Goldstein stated that demand for cryptocurrency, particularly through BlackRock’s IBIT Bitcoin ETF, has exceeded the firm’s expectations, driven by a recognition of its value as an emerging technology rather than mere speculation.

Q2: What is BlackRock’s view on tokenization?
Goldstein described tokenization of capital market tools as still in its infancy, with future growth expected to be exponential. He believes blockchain infrastructure will play a key role in transforming how assets are managed and traded.

Q3: What is the biggest obstacle to cryptocurrency adoption according to BlackRock?
The main challenge is a lack of investor education on the technical aspects of virtual assets and how to allocate them effectively within a portfolio, according to Goldstein.

Crypto

MEXC Commits to 1,000 BTC Purchase as Guardian Fund Targets $500M Expansion

Published

23 hours ago

May 13, 2026

Press Room

MEXC Commits to 1,000 BTC Purchase as Guardian Fund Targets 0M Expansion

Key Takeaways

BTC and USDT to Serve as Dual Reserve System for Market Stability

Crypto exchange MEXC is deepening its focus on reserve strength and user protection, announcing plans to expand its Guardian Fund fivefold to $500 million and acquire 1,000 bitcoin as part of a broader risk management strategy.

The exchange said the initiative will be rolled out over the next two years and is designed to create a dual-reserve structure combining liquid stablecoin holdings with long-term BTC reserves. The framework is intended to bolster platform stability and improve resilience during periods of market stress.

The announcement comes as MEXC continues to attract new capital and users. According to data from Defillama, the exchange recorded $271.6 million in net inflows over the past month through May 11, reflecting increased trading activity and participation across global markets.

Under the revised structure, the Guardian Fund will continue to hold significant USDT reserves to ensure immediate liquidity and operational flexibility. The addition of bitcoin is intended to provide a longer-term store of value capable of preserving purchasing power across market cycles.

Transparency Remains Key for MEXC

MEXC said the strategy is part of a disciplined reserve management approach rather than a reaction to short-term volatility. The company framed the expansion as an effort to build infrastructure comparable to institutional-grade financial safeguards increasingly expected in the digital asset industry.

“Trust has to be capitalized, not just claimed. The expansion of the Guardian Fund and the addition of bitcoin reserves reflect our commitment to building protection infrastructure that helps users access infinite opportunities with greater confidence,” CEO Vugar Usi said in a statement.

The exchange also emphasized transparency. Wallet addresses tied to the Guardian Fund’s USDT and bitcoin holdings have been disclosed publicly, allowing users to verify reserve balances on-chain in real time. The move highlights a broader trend among large trading platforms seeking to differentiate themselves through stronger balance sheets and more visible proof-of-reserves mechanisms.

For MEXC, the Guardian Fund expansion forms part of a wider push to position itself as a global platform capable of supporting long-term growth. The company said the initiative aligns with its broader strategy of improving transparency, strengthening risk management, and protecting users during periods of heightened market uncertainty.

Crypto

Bitcoin’s Bull-Bear Cycle Indicator Turns Green for First Time Since March 2023

Published

1 day ago

May 12, 2026

Press Room

Bitcoin’s Bull-Bear Cycle Indicator Turns Green for First Time Since March 2023

Key Takeaways

Bullish Signal Flashes Near $80,000

Cryptoquant’s Bitcoin Bull- Bear Market Cycle Indicator entered bullish territory on Tuesday for the first time since March 2023, per data shared by the analytics firm. The shift marks what analysts describe as a potential transition from a bear-market environment to one where conditions historically favor a sustained uptrend.

Image source: Cryptoquant

The indicator is built on Cryptoquant’s Profit and Loss (P&L) Index, which aggregates three key onchain metrics, namely the Market Value to Realized Value (MVRV) ratio, the Net Unrealized Profit and Loss (NUPL), and a comparison of Long-Term Holder and Short-Term Holder Spent Output Profit Ratios (LTH/STH SOPR). When the P&L Index climbs above its 365-day moving average, the indicator flips green. When it falls below, it turns red.

Bitcoin Bull-Bear indicator flips green, echoing previous cycle recovery signals.

The last confirmed green signal came in March 2023, and it held continuously until August 2024, a period that covered one of bitcoin’s most significant bull cycles, during which the price climbed from roughly $20,000 to an all-time high above $73,000. By that measure, Tuesday’s flip carries meaningful weight for traders watching for cycle turning points.

Historical Context and 2026 Forecasts

Despite the positive signal, Cryptoquant was careful to flag a caveat. In March 2022, the same indicator flashed green before price quickly rejected the move and continued lower, eventually bottoming out with the FTX collapse in November of that year. That false signal is why analysts say Tuesday’s read should be treated as a data point to watch, not a guaranteed green light.

The timing of the flip aligns with several other bullish onchain developments accumulating simultaneously. April spot bitcoin exchange-traded fund (ETF) inflows reached $2.44 billion, the strongest institutional accumulation month since October 2025. Whale wallets holding 1,000 BTC or more have grown by 142 addresses over the past six months.

Moreover, Glassnode’s RHODL ratio currently sits at 4.5, the third-highest reading in bitcoin’s history; the only comparable prior readings occurred at the 2015 and 2022 cycle bottoms, both of which were followed by sustained bull markets.

The Bull-Bear indicator had been deep in negative territory as recently as February 2026, when Cryptoquant noted it had dropped to its lowest level since the FTX bottom. That stretch corresponded with bitcoin pulling back from its October 2025 peak near $126,000. The recovery since has been gradual, with price stabilizing in the $80,000 range and ETF flows turning consistently positive heading into May.

Price forecasts for the rest of 2026 remain divided, with Standard Chartered and Bernstein both targeting $150,000 by year-end, while Fidelity’s director of global macro, Jurrien Timmer, has argued that the October 2025 high may have been the cycle top, with 2026 acting as a consolidation year rather than a continuation.