The price of FTX’s FTT token has lost around 18% of its value over the past 24-hour period as the cryptocurrency market fears the exchange’s quant trading firm Alameda Research could be insolvent.

The U.S. Department of Justice has announced it seized around $3.36 billion worth of stolen Bitcoin during a previously unannounced raid on the residence of James Zhong. The announcement came after Zhong pleaded guilty to one count of wire fraud.

A New Hampshire judge has ruled that cryptocurrency startup LBRY violated securities laws by selling its native LBC tokens without registering with the U.S. Securities and Exchange Commission (SEC).

Top stories in the Crypto Roundup today:

• FTX’s FTT Token Plummets as Market Weighs Contagion Fears
• DOJ Seizes $3.36 Billion in Bitcoin Stolen From Silk Road Marketplace
• Federal Judge Rules LBRY Sold Tokens as Securities
• Bitcoin Volatility Across Bear Markets

FTX’s FTT Token Plummets as Market Weighs Contagion Fears

The price of FTX’s FTT token has lost around 18% of its value over the past 24-hour period as the cryptocurrency market fears the exchange’s quant trading firm Alameda Research could be insolvent.

Short interest in FTT has surged while the token’s price plummeted, shortly after Binance CEO Changpeng Zhao revealed that the firm is selling its FTT token holdings after “recent revelations came to light.” The exchange used to have a minority stake in FTX, but it exited its investment last year and received at the time $2.1 billion in BUSD and FTT.

Binance holds around 23 million FTT, worth over $500 million. Per Zhao, Binance’s sale will take months to complete, due to “market conditions and limited liquidity.” Zhao’s move came shortly after a leaked balance sheet of Alameda revealed it was seemingly propped up by FTT.

The crypto market has since then grown concerned about FTX’s liquidity, with withdrawals from the exchange piling up to the point $450 million left its wallets. Binance saw an inflow of over $400 million of stablecoins after the outflows began.

More recently, BitDAO, a large decentralized autonomous organization (DAO) that is supported by crypto exchange Bybit, has asked Alameda to prove they continue to hold 100 million BIT tokens they acquired in November last year by converting 3.36 million FTT

The swap deal required Alameda to hold the tokens for at least three years, but a sudden drop in BIT’s price saw some in the community question the quant trading firm’s position. BitDAO issued a veiled threat to take action, which could involve the sale of the FTT.

DOJ Seizes $3.36 Billion in Bitcoin Stolen From Silk Road Marketplace

The U.S. Department of Justice has announced it seized around $3.36 billion worth of stolen Bitcoin during a previously unannounced raid on the residence of James Zhong. The announcement came after Zhong pleaded guilty to one count of wire fraud.

Authorities seized about 50,676 BTC from Zhong during a search of his house in Gainesville, Georgia in November 2021, according to the DOJ. It’s the department’s second-largest financial seizure to date, following its seizure of $3.6 billion worth of BTC tied to the Bitfinex hack.

According to the DOJ, Zhong stole BTC from the now-defunct Silk Road dark web marketplace, in which drugs and other illicit products were bought and sold with cryptocurrency. The Silk Road was launched in 2011 and was shut down by the Federal Bureau of Investigation in 2013.

Zhong reportedly used a “sophisticated scheme” to steal the bitcoins from Silk Road. The hacker reportedly created nine fraudulent accounts and funded each with between 200 and 2,000 BTC to then trigger over 140 transactions in rapid succession, tricking the marketplace’s withdrawal-processing system.

Federal Judge Rules LBRY Sold Tokens as Securities

A New Hampshire judge has ruled that cryptocurrency startup LBRY violated securities laws by selling its native LBC tokens without registering with the U.S. Securities and Exchange Commission (SEC).

The SEC sued LBRY in March 2021, alleging the tokens were securities that had to be registered with the regulator. LBRY claimed that LBC tokens weren’t securities and that the SEC did not give it fair notice that the sale was subject to securities laws.

LBRY is a blockchain-based file-sharing network. Federal Judge Paul Barbadoro ruled that “no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defense that it lacked fair notice.”

The LBRY ruling could affect the SEC’s lawsuit against  Ripple Labs and two of its executives, which have been charged with selling $1.3 billion in unregistered securities – XRP. Ripple’s defense has hinged on its claim that XRP is not a security. Major players, including Coinbase and the Blockchain Association, have filed to support Ripple in court.

Bitcoin Volatility Across Bear Markets

In our Q4 Outlook Report, we looked at how Bitcoin's volatility has been steadily stabilizing in a bounded range compared to the last bear market. While this may suggest cryptocurrencies are maturing as an asset class, such patterns also typically lead up to a large spike in volatility.

During the last bear market, BTC’s average annualized volatility was 79%, while the current average volatility is 63%. It’s possible a high-stress event could take place in the traditional financial system, leading to increased sell-side pressure across major asset classes.

Read a detailed examination of volatility and bear market trends on CryptoCompare’s Q4 Outlook Report.

State of the Crypto by Top Tier Exchange Volume

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