Q9 Weekly | Doubling Down

Q9 Capital
6 min readMar 30


30 March 2023

  • Short squeeze pushes BTC back above $28k
  • Binance and CZ sued by CFTC, alleges criminal activity
  • SVB, Signature acquirers won’t touch crypto

Crypto markets rebounded following a mid-week lull as BTC shot back above $28.3k as a short squeeze took the market to a weekly high after 1.5K BTC shorts were liquidated.

Bitcoin is now up 70% this year, posting its best quarterly gain in two years. The rebound has put BTC ahead of ETH ($1.8k), which appears on track for a 50% quarterly gain. XRP also continues ripping (with a weekly gain of 28%) amid speculation its court case may be coming to an end.

Law enforcement agencies and regulators continue turning up the pressure on the sector: Just this week, Do Kwon was arrested in Montenegro, SBF is being charged with bribing Chinese officials to the tune of $40mn, and Binance is being sued by the CFTC.


Source: TradingView

Bitcoin’s correlation has dropped significantly over the last 90-days vs other risk asset classes, and risen vs gold. Analysts hold that this could be due to the recent lack of trust in the banking sector, and BTC serving as a tool for diversification. The narrative appears to be shifting from speculative asset back to a store of value.

Source: TradingView

The Crypto Fear & Greed Index pulled back slightly after hitting a recent high for the past eighteen-months. The index reached 68 last week. It has pulled back to 59, suggesting investor sentiment for now remains bullish.

Crypto Fear & Greed Index, 1 Year

Source: Crypto Fear & Greed Index

CFTC You in Court

Both Binance and its chief executive, Changpeng Zhao, are being sued in the US by commodity market regulators (CFTC) in a complaint that claims the defendants committed “wilful evasion of US law”. The move is the most significant US enforcement action yet against the world’s largest crypto exchange.

The civil suit accuses the crypto giant of a slew of counts, including failing to register its derivative products and failing to fence off its services from US customers. But it’s also filled with specific details about alleged criminal activity from the top officers of the company, whom the CFTC accuses of knowing about and engaging in criminal transactions. CZ has issued a response to the CFTC complaint.

If the commodities cops are taken at their word, Binance sacrificed regulatory compliance for the sake of growth.

“Internally, Binance officers, employees, and agents have acknowledged that the Binance platform has facilitated potentially illegal activities,” the CFTC’s complaint reads, citing the example of a conversation between former chief compliance officer Samuel Lim and another colleague in February 2019 about a transaction with Hamas, a militant group. Lim reportedly told the colleague that terrorists typically send “small sums,” because “large sums constitute money laundering.” The colleague responded, “can barely buy an AK47 with 600 bucks.”

The complaint also alleges that Binance has grown its US business despite publicly stating its intent to block US customers from accessing the platform. Allegations in the complaint include a claim that even after announcing US restrictions Binance told its most valuable US customers how to avoid its compliance controls.

In response, the firm saw $2bn in outflows in a few days. Overall, Binance holds $63.2bn in the exchange’s publicly disclosed wallets. WSJ reported that the exchange’s spot market share dropped to a low of 30% on March 24th from 57% at the start of the month. Binance maintained its 66% market share for the crypto derivatives market as of March 24, according to CryptoCompare.

“Operation Chokepoint 2.0”

Crypto platforms continue to be frozen out by traditional banks… First Citizens Bank agreed over the weekend to buy most of what is left of Silicon Valley Bank, but there was one thing it did not want… First Citizens’ purchase agreement went out of its way to exclude crypto and loans backed by crypto from the deal.

New York Community Bank also snapped up the remnants of Signature Bank but refused to touch its substantial crypto banking arm. The US Federal Deposit Insurance Corporation is now having to return $4bn in deposits directly to those customers. Signature’s crypto clients have reportedly been given until April 5th to take their funds out and find another bank, or have their accounts closed by the federal regulator.

Conspiracy theorists on the internet speculate that they see this (amongst everything else going on) as a concerted effort by the US government to ban crypto completely. Dubbed “Operation Chokepoint 2.0”, the theory asserts that Biden’s White House, the Federal Reserve, the OCC, FDIC and the DOJ, alongside “influential members of Congress” are all in cahoots; hell bent on yoinking crypto’s fiat access to suffocate the industry once and for all.

Crypto proponent Nic Carter posted “Operation Choke Point 2.0 Is Underway, And Crypto Is In Its Crosshairs,” outlines a string of bearish headlines, which when added up, seem to indicate a concerted, government-backed effort to discourage traditional finance institutions from servicing the crypto industry.

This is all a bit overblown… officials are certainly doubling down their efforts to regulate crypto… but there are still banks in the US serving digital asset companies in limited ways. Circle, for example, has big deposits at BNY Mellon and a partnership with New Jersey bank Cross River. Regulators insist that they are just trying to ensure that banks are stable, consumers are protected, and crypto does not enable money laundering and other crimes. Official attitudes have definitely hardened since FTX’s collapse — they have had to.

Meanwhile, on the over side of the world, Hong Kong regulators are convening a meeting between crypto firms and bankers in a bid to ease financing for the sector as the city seeks to establish itself as a hub for virtual assets. And Dubai’s VARA continues to grant licenses for crypto platforms. For the time being at least, it looks like crypto firms will find more hospitable homes outside of the US.

In the News…



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