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• The Bureau of Investigative Journalism (TBIJ) has identified 168 companies accused of running crypto or fraudulent foreign exchange trading scams in the U.K.
• Victims of the scams have lost roughly $3.4 million (£2.8 million) and are scattered across the U.K., the U.S., Canada, Turkey, Germany, and Poland.
• The U.K. government has pledged to tighten the rules and verify information provided to Companies House to combat fraudulent activities.

The U.K. is home to hundreds of companies running crypto and forex scams, according to a report released by the Bureau of Investigative Journalism (TBIJ). The report identified 168 companies accused of running crypto or fraudulent foreign exchange trading scams in the U.K., resulting in losses of roughly $3.4 million (£2.8 million) from victims scattered across the U.K., the U.S., Canada, Turkey, Germany, and Poland.

The scams are often perpetuated via social media, dating websites, and Whatsapp, with victims being convinced to invest in crypto trading platforms. Of the 168 companies identified, 17 have been confirmed as „pig-butchering“ scams. Most of the companies are registered to London addresses and have at least one Chinese director, taking advantage of the U.K.’s reputation as a trustworthy location.

In response to the scams, the U.K. government has pledged to tighten the rules and introduce a requirement to verify information provided to Companies House. Financial crime investigator Graham Barrow welcomed the reform as a “step forward”, but warned of potential loopholes in the legislation. He stated that ambiguity surrounding ID verification, the ability to provide false addresses and insufficient penalties are some of the issues that need to be addressed.

The U.K. government is taking steps to combat the issue of crypto and forex scams, but victims of such scams have been warned to remain vigilant and to seek professional advice before making any investment decisions. It is important for investors to thoroughly research any potential investments and to be aware of the potential for fraudulent activity.

• Bitcoin is acting as a liquidity indicator for central bank balance sheets, as central banks are trying to reign in inflation by decreasing their balance sheets and increasing interest rates.
• The central bank balance sheet of the US, Japan, UK, China, and Europe amounts to $760T, down from $800T back in May 2022.
• Bitcoin value increases as central banks have to increase their balance sheet due to being on a credit-based system, i.e., the need for perpetual growth.

As the world grapples with rising inflation, central banks across the globe are attempting to reign in the problem by decreasing their balance sheets and increasing interest rates. This has resulted in a decrease in the central bank balance sheet of the US, Japan, UK, China, and Europe, down from $800T back in May 2022 to $760T at present.

This decrease has been accompanied by a rise in the price of Bitcoin, acting as a liquidity indicator for central bank balance sheets. Many narratives have been developed over the years for Bitcoin, one being an inflation hedge and another a liquidity hedge. As central banks are on a credit-based system, they need to increase their balance sheets in order to remain viable. This increase is directly reflected in the increase in Bitcoin value, as the cryptocurrency is seen to move on the expansion of credit on balance sheets.

James Van Straten, Research Analyst at CryptoSlate, commented, “These movements of Bitcoin are significant to witness, as they are a direct reflection of the increase in credit expansion on balance sheets.” Van Straten is passionate about data, technology, and identifying trends, and is a freedom and technology maximalist, seeing Bitcoin as the greatest invention of the 21st century.

It appears that Bitcoin is acting as a reliable indicator of liquidity for central bank balance sheets, and this is likely to be the case for the foreseeable future. As central banks continue to attempt to control inflation by decreasing their balance sheets and increasing interest rates, Bitcoin value is likely to increase in tandem. This will provide investors with a reliable indicator of the state of central bank balance sheets, as well as an inflation hedge and liquidity hedge.

• Fox News host Tucker Carlson speculated that the recent bullish market moves of Bitcoin were due to the U.S. government buying Bitcoin to pay ransomware attackers.
• On Jan. 11, the FAA halted nationwide departures, delaying thousands of flights, due to a “computer outage”.
• Almost three weeks into the new year, the leading cryptocurrency has recorded a 29% growth in price.

The recent bullish market moves of Bitcoin have been the subject of much speculation, and Fox News host Tucker Carlson is the latest to join the fray. On his show, Carlson suggested that the U.S. government may have been forced to buy Bitcoin to pay cyber attackers to release control of U.S. airspace.

The speculation comes on the heels of the Federal Aviation Administration (FAA) halting nationwide departures on Jan. 11, delaying thousands of flights, due to a “computer outage”. According to the transportation agency, this was due to a technical issue with the Notice to Air Missions system (NOTAM). However, Carlson postulated that the “outage” was actually a cyber attack and that “almost all ransoms like this are paid in Bitcoin”.

Furthermore, Carlson noted similar “outages” had occurred in Canada and the Philipines, lending further credence to his theory. On the day U.S. flights were grounded, BTC posted a significant 4% upswing to close the day at $17,930.

Almost three weeks into the new year, the leading cryptocurrency has recorded a 29% growth in price. This is particularly noteworthy given the broader macro uncertainty that currently reigns.

While there is no concrete evidence that the U.S. government bought Bitcoin to pay ransomware attackers, Carlson’s speculation points to the potential that the digital currency could be used in this manner in the future. As such, it will be interesting to see if other governments follow suit in the coming months and years.

• Silvergate Bank received a $4.3 billion bailout from the Federal Home Loan Bank after the collapse of crypto exchange FTX.
• The bank’s deposits had spiked following withdrawals from customers after the FTX collapse and dropped by $3.8 billion by the end of 2022.
• Silvergate’s CEO reported that the firm had less than 10% exposure to FTX as of September 30, and deposits from BlockFi accounted for less than $20 million of the bank’s total deposits.

After the collapse of FTX, one of the major crypto exchanges, Silvergate Bank was at a critical position. As the bank’s business model focused on providing banking services to crypto exchanges and investors, around 90% of the bank’s deposits were from crypto. Silvergate’s 10 biggest depositors, including Coinbase, Paxos, Crypto.com, Gemini, Kraken, Bitstamp and Circle, represented about half of the bank’s deposits.

Due to the FTX collapse, Silvergate’s users had withdrawn $8.1 billion of digital assets by December 2022, causing the bank’s deposits to drop by $4.1 billion to $3.8 billion. This is when the bank received an $4.3 billion bailout from the Federal Home Loan Bank. However, the fears of Silvergate’s users were put to rest when Alan Lane, the bank’s CEO, reported that the firm had less than 10% exposure to FTX as of September 30 and BlockFi deposits accounted for less than $20 million of the bank’s total deposits.

Although the $4.3 billion bailout came as a relief to Silvergate Bank, the FTX collapse still had a huge impact on the bank. The bank’s deposits had dropped significantly and its customers had withdrawn a large amount of digital assets. It remains to be seen if the bank will be able to recover from this setback and return to its former glory.

• Around $120 million worth of Bitcoin (BTC) was withdrawn from crypto exchanges on Jan. 10.
• Roughly $50 million of the withdrawals came from Binance, while $30 million was pulled from Coinbase.
• Crypto investors favored self-custody over crypto exchanges due to FTX’s implosion and BTC’s illiquid supply in cold or hot storage wallets passing 15 million coins.

On January 10th, a significant amount of Bitcoin (BTC) was withdrawn from cryptocurrency exchanges. According to data from Glassnode, around $120 million worth of BTC was pulled from various exchanges. Of this amount, $50 million was withdrawn from Binance and $30 million from Coinbase.

This trend of more BTC outflows than inflows has been occurring since the beginning of the year, with the most significant inflow being around $80 million on January 4th. Despite this, exchanges have mostly seen more outflows than inflows on other days.

The reason for this shift in preference towards self-custody instead of exchanges is the collapse of FTX late last year. At the height of the FUD, Binance saw over $600 million in BTC withdrawn from its reserve in a single day, while Coinbase experienced BTC withdrawals of roughly $3.5 billion in November.

Due to this, the illiquid supply of BTC in cold or hot storage wallets passed 15 million coins, thus indicating that crypto investors are favoring self-custody over exchanges. However, this comes with its own risks, as a Bitcoin core developer recently lost 216 BTC due to a compromise.

It is clear that, despite the risks associated with it, the preference for self-custody over exchanges is still high. While exchanges are still the most popular way of buying and selling BTC, the trend of more outflows than inflows is indicative of a shift in investor preference. As such, it is important to understand the implications of this trend and the risks associated with it, in order to make more informed decisions.