First Mover Asia: Bitcoin Rebounds to $30.1K After Retreating to June Low

Good morning. Here’s what’s happening:

Prices: Bitcoin sagged to its lowest level since late June, falling beneath $29,700, before recovering some lost ground.

Insights: Jarek Jakubcek, Binance's law enforcement training head, combats global crypto scams by training law enforcement on what to look for.

Bitcoin Recovers $30K

The good times following Ripple's partial victory against the SEC in a court decision last week were a distant memory as bitcoin sank to $29,769 at one point on Monday, its lowest level since late June.

But the largest cryptocurrency by market capitalization regained some lost ground to recently trade at $30,130, roughly flat over the past 24 hours, and within the range it's occupied for much of the past month. Bitcoin soared past $31,700 last Thursday after the U.S. District Court of the Southern District of New York ruled that Ripple's sale of its XRP tokens on exchanges and through algorithms did not constitute investment contracts.

Analysts have suggested that bitcoin may continue to experience dips below this threshold until the SEC decides whether to approve one of the multiple spot bitcoin ETF applications that financial services giants, including BlackRock, filed last month. Those filings spurred a sharp, mid-June increase in BTC and other cryptos longing for a price catalyst.

But the SEC, which has rejected a number of spot BTC applications over the past two years, is unlikely to move for months, given the unhurried pace of its previous decisions. The agency is still gathering information about the proposals.

"There's a continued focus solely on U.S. (ETFs)," Edward Moya, senior market analyst for foreign exchange market maker Oanda, said in a phone interview with CoinDesk. "People are not going to be as optimistic until we get a further update that we're going to get that ETF done in the States."

He added: "We may see a lot of back and forth before we get that firm sign-off (from the SEC)."

Ether, the second largest crypto by market value, was recently changing hands at $1,913, off nearly a half-percentage point from Sunday, same time and well off its heights last week above $2,000. Other major cryptos, which also soared last week, sagged on Monday before rebounding slightly. XRP and ADA, the token of the Cardano smart contracts platform, were recently off 1.5% and 0.6%, respectively, while SOL, the native crypto of the Solana blockchain was down more than 2.8%.

Equity markets buoyed by last week's encouraging second quarter earnings from a number of major banks edged up with the Nasdaq Composite and S&P 500 rising 0.9% and 0.3%, respectively. Bank of America and Goldman Sachs announce their Q2 results on Tuesday and Wednesday, respectively.

In an email early Monday, Moya noted "some progress in small crypto companies finding banks that can help facilitate transactions, as Customers Bancorp has emerged as the winner from the downfall of Signature Bank and Silvergate Capital Corp."

"Bitcoin’s range of $29,500 and $31,500 may hold until we get a major crypto headline," he added.

The Complicated Work of Binance’s Jarek Jakubcek

There’s never a dull day for Jarek Jakubcek, head of Binance Law Enforcement Training, and a former cryptocurrency specialist in Europol Cybercrime Centre’s (EC3) Dark Web team.

Based in Dubai, Jakubcek’s responsibilities are global, including the Asia Pacific region, where retail cryptocurrency adoption but also bad actors and scams have soared.

"Cryptocurrencies, as practical technology, are basically bound to be abused by criminals because it is convenient and because it is practical," he said.

Jakubcek spends a lot of his time training law enforcement throughout the region on gathering evidence and tracking down who’s behind these schemes – and often they are the same crooks as in traditional finance: scam centers in southeast Asia.

“We all know that there is no such thing as high guaranteed profits. But to many people who are more financially naive, this may sound like a reasonable proposition,” he explains. “This is why it is really important to promote crypto literacy and raise awareness of the potential risk connected with cryptocurrencies.”

Years of investigations

Law enforcement has been investigating crypto crimes for years and has found a lot of operational success, thanks to blockchain's transparent nature.

Despite its user-friendliness for everyone, including criminals, it is also beneficial for investigators as the activity is out there on-chain and not hidden in bank logs and shell corporations.

Often, it’s more effective to track back wallets to exchanges and request KYC data than to rely on tracing IP addresses to telcos because of the prevalence of VPNs and other ways of masking connections.

While Jakubcek spends a lot of his time working with real law enforcement from around the world, sometimes, his group encounters fraudulent requests – not necessarily always bad actors, but rather conning private investigators attempting to masquerade as cops in order to get more info for their clients.

One private investigator, Jakubcek recalls, dissatisfied with an initial refusal from Binance to disclose customer data to a private individual, sent over a second request but from a fake domain name.

“It was not the usual law enforcement domain, so we checked the domain, and we discovered it was registered one day prior to the request,” Jakubcek said. “It was kind of obvious that the private investigator wanted to pretend to be something that he was not.”

Fake court orders and political problems

Fake court orders asking for funds to be moved are another thing his team has dealt with.

“We are very lucky to have a team of almost 30 ex-law enforcement people, because we know how law enforcement requests should look like," he said.

A global company like Binance has a tough time avoiding geo-politics, which is a simple byproduct of operating in so many of the world’s markets.

Law enforcement requests can sometimes conflict with different countries’ national interests. In 2020 and 2021, for instance, the United States announced a series of sanctions against key individuals in Hong Kong’s political leadership and law enforcement for their role in undermining Hong Kong’s autonomy and implementing a controversial national security law.

There isn’t yet a cut-and-dry answer on how Binance balances a legitimate law enforcement request under local rules with competing global interests.

"There are jurisdictions with which we have to be sensitive; we also have to consider the nature of the crime, and who is the target of inquiry. For some of the requests, if the individuals are of sensitive nationality, then we are not responding,” he said.

So far, from Hong Kong, Jakubcek says that 90% of the requests are “purely fraud related.”

“Personally, I don’t remember any politically sensitive requests coming from Hong Kong,” he said. “I’m not saying there hasn’t been any, but in my investigations career in APAC, I don’t remember it happening.”

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In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

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SEC's Gensler 'Disappointed' by Part of Ripple's XRP Judgement, Still Assessing Opinion: Ripple scored a partial victory in its fight with the SEC last week with a court ruling that institutional sales of the tokens violated federal securities laws, but sales on exchanges and programmatic sales did not.