Rapture #233: Regulatory Changes in Canada, BitGo Acquisition falls Through, and Research on Insider Trading at Coinbase
Interesting movements in the markets today. Could always be wrong, but I think this gyration might be the beginning of the next down leg in crypto. My base stance is still bearish, as I have iterated before, and crypto seems to sputtering despite the rebound in equities. We shall see.
Outside of the markets, lots of interesting news and reports coming out this past week. The Ontario Securities Commission recently imposed the most bizarre crypto restriction I have seen to date, the BitGo acquisition Galaxy Digital was pursuing fell through, and some interesting research came out regarding insider trading at Coinbase, a topic I have a feeling we will hear about much more in the coming months-years considering the SEC's investigations.
Let's dive into each item.
Canada supposedly restricts purchasing altcoins
A few days ago, the Ontario Securities Commission (OSC) provided an update for crypto platforms that operate in Canada. Many Canadian trading platforms in reaction to this update, such as Newton, are now putting net buy limits on the trade accounts of users for any crypto that is not BTC, ETH, LTC, and BCH. Users in Ontario for example will only have an annual net buy limit of $30,000 for coins that are not BTC, ETH, LTC, and BCH.
While these buy limits are not set in the OSC news release, many are discussing how these limits are being imposed on the major crypto exchanges in Canada.
I will keenly watch if this type of restriction become a trend in other jurisdictions, like the US.
BitGo Acquisition falls Through
Canada restricting altcoin purchases was not the only wild news of the week. A few days ago, Galaxy Digital officially called off its $1.2 billion acquisition of BitGo for not providing audited financial statements for the year 2021. In response, BitGo is now suing Galaxy Digital for $100 million in damages.
Galaxy Digital reported a second quarter loss of $554.8 million, but has approximately $1 billion cash on hand.
Rumor is that Novo, the CEO of Galaxy, and Belshe, the CEO of BitGo, were having some interpersonal conflicts that might have spurred this breakup. Personality conflicts are real. Howard Roarks and Hank Reardens only exist in novels.
Study finds insider trading occurs on 10 - 25% of Coinbase listings
Some PHD candidates recently came out with a study that concludes around 10 - 25% of Coinbase listings involve insider trading and ill-gotten gains are as high as $1.5 million.
The researchers were able to come to this conclusion by analyzing the DEX price action 300 - 100 hours before their listing on a centralizing exchange, hypothesizing that insider trading likely occurs on DEXs because the transactions are harder to trace than on centralized exchanges.
Regulators are clearly focused on this issue, as an ex-product manager from Coinbase was charged earlier this year for releasing information about upcoming listings on Coinbase.
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