Bitcoin Is The Fraud? JPMorgan Metals Desk Fixed Gold Prices For Years (#GotBitcoin?)
Trump Administration Unable And Unwilling To Prosecute Banksters. Bitcoin Is The Fraud? JPMorgan Metals Desk Fixed Gold Prices For Years (#GotBitcoin?)
The United States’ largest bank faced fresh ridicule from Bitcoin (BTC) circles this week after prosecutors said traders had conducted more market fraud.
As Bloomberg reported on Sept. 16, JPMorgan Chase is facing an inquiry over the behavior of at least a dozen precious metals traders.
JPMorgan Performed “Thousands” Of Illegal Moves
According to investigators, the employees willfully engaged in price-fixing of precious metals on thousands of occasions. Both market participants and JPMorgan’s own clients suffered losses as a result, they claim.
“Based on the fact that it was conduct that was widespread on the desk, it was engaged in thousands of episodes over an eight-year period… We’re going to follow the facts wherever they lead, whether it’s across desks here or at any other bank or upwards into the financial institution,” Bloomberg quoted Assistant Attorney General Brian Benczkowski as saying.
JPMorgan is well known as being one of the more vocal skeptics of cryptocurrencies. CEO Jamie Dimon became notorious for his soundbites, which began in 2017 when he labeled Bitcoin a fraud in itself.
Dimon since appeared to have a change of heart, pledging not to discuss Bitcoin again in public, while denying he disliked it in private comments to Cointelegraph.
Bitcoin, Bankers And Fraud
More recently, the bank released its own digital currency offering, JPM Coin, which gained similar criticism over its technical characteristics.
The irony of the precious metals scandal was thus not lost of crypto commentators.
“They were charged with wire fraud, bank fraud, and market manipulation. But I was told by the CEO that Bitcoin is the fraud,” Twitter analyst known as Rhythm summarized.
JPMorgan is not the only bank to issue warnings over cryptocurrency’s alleged fraudulent nature while being embroiled in legal turmoil.
In 2018, Dutch institution Rabobank claimed Bitcoin contained money laundering compliance hazards. Subsequently, authorities fined it $369 million for money laundering.
Bitcoin ‘Can Be’ A Reliable Financial Instrument After All: Mark Cuban
One of the most outspoken critics of Bitcoin (BTC) has delivered mixed messages about its reliability as a financial asset.
In comments to Forbes published on Dec. 10, Mark Cuban appeared to contradict himself on Bitcoin’s overall utility.
When asked whether or not the cryptocurrency could become a “reliable financial instrument,” the Dallas Mavericks owner gave two differing responses. “Not a chance,” he wrote at first. Subsequently, he added, “It is a collectible. If you consider art or gold a viable stable financial asset, then yes. It can be.”
Fiat fails To Comfort Bitcoin Deniers
While Cuban complained that investors were put off Bitcoin due to the difficulty in understanding how it works, the ambiguity of the comments highlighted what has become a common problem for Bitcoin skeptics — explaining why they are skeptical.
In a telling example last year, infamous naysayer Jamie Dimon, CEO of JPMorgan, told a Cointelegraph reporter that he was “not a skeptic” of Bitcoin when pushed to explain his previous claim it was a fraud.
Cuban appeared to set Bitcoin and gold on an unequal footing with fiat currency, something which Bitcoin proponents conversely deny.
As Cointelegraph often notes, figures such as Saifedean Ammous, author of “The Bitcoin Standard,” argue that it is Bitcoin’s limited supply which is among its biggest assets. Fiat, by contrast, faces unlimited manipulation and inflation, destroying value for those who hold or “collect” it.
Cuban has a history of rubbishing Bitcoin, in September suggesting he would prefer bananas over Bitcoin holdings.
JPMorgan’s Pinto Says Client Demand Isn’t There Yet For Them For Bitcoin
JPMorgan Chase & Co. Co-President Daniel Pinto said that client demand isn’t there yet on Bitcoin, but he’s certain that’ll change at some point.
“If over time an asset class develops that is going to be used by different asset managers and investors, we will have to be involved,” Pinto said in an interview with CNBC. “The demand isn’t there yet, but I’m sure it will be at some point.”
Pinto signaled in a recent staff meeting that he’s open-minded about Bitcoin, CNBC said, citing unidentified people familiar with the matter.
Crypto Is ‘Poorest Hedge’ For Drawdowns In Equities, JPMorgan Analysts Say
Analysts bashed Bitcoin despite JPMorgan co-president Daniel Pinto claiming that Bitcoin adoption is inevitable at some point.
Analysts at American investment bank JPMorgan Chase have delivered another skeptical statement on Bitcoin (BTC), arguing that its current price is much higher than its fair value.
In a regular memo for investors, JPMorgan argued that cryptocurrencies like Bitcoin are an “economic side show” and the poorest hedge against a decline in equity prices, Reuters reports Friday.
The analysts said that the mainstream adoption of Bitcoin increases its correlation with cyclical assets, which makes it a less attractive asset for portfolio diversification:
“Crypto assets continue to rank as the poorest hedge for major drawdowns in equities, with questionable diversification benefits at prices so far above production costs, while correlations with cyclical assets are rising as crypto ownership is mainstreamed.”
In January 2021, JPMorgan strategists John Normand and Federico Manicardi argued that Bitcoin has been becoming a cyclical asset, opposed to a hedge against market stress.
A cyclical asset refers to stocks that follow a trend depending on a certain business cycle. For example, companies in discretionary industries like restaurants, hospitality, airlines, furniture, automotive and others.
As previously reported by Cointelegraph, the question of whether Bitcoin is a cyclical or non-cyclical asset is still debatable, with many industry players strongly believing that the cryptocurrency is a great hedge against a market crisis.
The latest comments from JPMorgan come shortly after the company’s co-president Daniel Pinto said that the bank would eventually have to get involved in Bitcoin following growing client demand. In October 2020, when Bitcoin was trading around $13,000, JPMorgan predicted that Bitcoin’s price would double or triple in the long term.
At the time of writing, Bitcoin is trading at $52,764, up more than 70% over the past 30 days. After breaking the $50,000 price level on Feb. 16, Bitcoin briefly hit a new all-time high of above $53,000 earlier today, according to data from crypto monitoring website CoinGecko.
JPMorgan Joins Choir Warning Of Tether’s Sway On Crypto Markets
Questions about the influence of Tether continue to swirl in cryptocurrency markets, even as the companies behind it defend the so-called stablecoin’s soundness.
Tether, whose backers say is equivalent one-to-one to the dollar, is used in transactions to move between cryptocurrencies and fiat money. Traders also often use the token as a place to park funds at times of high volatility, and many consumers in China use it to enter the digital-asset markets.
It has a market capitalization of about $34 billion, according to CoinGecko — but in a sign of how much it’s used in the system, the 24-hour trading volume on Friday was about $107 billion.
Tether “is engaged in a classic liquidity transformation along the lines of traditional commercial banks, but is not subject to the same strict supervisory and disclosure regime, and certainly does not have anything like deposit insurance,” JPMorgan Chase & Co. strategists including Josh Younger and Joyce Chang, wrote in a report released late Thursday.
Tether Ltd. claims to have reserve assets of cash and equivalents equal to its outstanding liabilities, but has “famously not produced an independent audit and has claimed in court filings that they need not maintain full backing,” the strategists said.
“Were any issues to arise that could affect the willingness or ability of both domestic and foreign investors to use Tether, the most likely result would be a severe liquidity shock to the broader cryptocurrency market which could be amplified by its disproportionate impact on high-frequency-trading-style market makers which dominate the flow,” the JPMorgan strategists wrote.
Other industry observers are less concerned, citing the wide use of Tether by large exchanges such as Binance.
“The facts of mass adoption tilt favorably toward Tether’s legitimacy,” said Bloomberg Intelligence strategist Mike McGlone. “It was about April 2019 that Tether came under investigation by the New York Attorney General.
Since then, they have been under their microscope, yet the assets under management has jumped to about $30 billion from around $5 billion. It seems the market doesn’t care.”
New York’s attorney general has alleged that the officials who control the crypto exchange Bitfinex and Tether failed to disclose that it entrusted more than $1 billion of commingled client and corporate funds to a Panamanian firm, Crypto Capital Corp. Bitfinex and Tether have said they’re seeking to recover funds lost when Crypto Capital was shut down.
Once Fired By Jpmorgan Over A Trading Blowup, He’s Now The CFO
The CV isn’t quite what you’d expect for someone who’s about to handle the finances of the mighty JPMorgan Chase & Co.
Long before Jeremy Barnum was promoted to chief financial officer, he was fired over a trading mishap — by JPMorgan. He later parted ways with hedge fund BlueMountain Capital Management over another market blunder.
But then began Barnum’s second act. JPMorgan lured him back in 2007 with a vague mandate to help with its credit-trading operations — shifting from free-wheeling, big-money-wagering roles to the nuts and bolts of the operation. Soon after, Daniel Pinto, now Chief Executive Officer Jamie Dimon’s top lieutenant, took a liking to Barnum, helping his ascent.
Lots of people bounce back, but Barnum’s rise to CFO of the banking giant is an unlikely Wall Street tale. He helped pioneer credit derivatives, got tossed out of trading roles at sell-side and buy-side firms, refocused on tackling risks and won benefactors in JPMorgan’s top rungs.
“Most people on Wall Street have some form of career setback in their life, and recovering from it is what makes them better in their job,” Troy Rohrbaugh, JPMorgan’s head of global markets, said in an interview.
Parts of Barnum’s resume read like those of many others in Wall Street’s corridors of power: Born in New York, attended the elite Groton boarding school in Massachusetts, then went on to college at Harvard.
But before making his way to Groton, Barnum, 48, spent his youth in a bohemian neighborhood of Barcelona with his pianist mother, picking up Spanish and Catalan, and listening to a spectrum of economic debate that included anarcho-syndicalism — a far cry from the Reaganism that dominated American politics at the time.
“You get to know him a little bit and he’s just different than all the other Groton and Harvard people,” said Gus Christensen, a former banker who left Wall Street for politics. They’ve been friends since joining the bank together in 1994, when Barnum, armed with a chemistry degree, showed up in a second-hand Brooks Brothers suit.
Christensen and others noted that Barnum’s time overseas had left him talking differently from his peers. “He speaks like a movie actor in the 1930s — he has a little bit of a lockjaw. It’s not a way of speaking in English that I had heard from anyone else in my generation,” Christensen said. “It’s much more subtle now than it was then.”
JPMorgan declined to make Barnum available for comment. This description of his career is based on interviews with more than a dozen current and former colleagues.
After a half-decade on desks handling foreign-exchange options and emerging-markets derivatives, Barnum landed in 1999 on the credit-derivatives team, where he could put his prowess with math and structuring to work. That placed him at the nexus of rapid change in the market — and within JPMorgan itself.
The firm was pioneering credit-default swaps, contracts that work like insurance to reimburse investors if a borrower fails to pay up. It was also in the midst of mergers and acquisitions that would culminate in 2004 with its combination with Jamie Dimon’s Bank One Corp.
That year, JPMorgan’s results in fixed income faltered. When Barnum’s team lost a bundle, his name was added to a list of dismissals as the bank’s bosses set out to restructure the unit. He sent coworkers a tongue-in-cheek farewell email recommending that they closely study the career of Joseph Stalin’s henchman Lavrentiy Beria and get really good at PowerPoint.
Barnum was soon snapped up by BlueMountain, which named him head of its London office in 2005. The next year, the fund took a bath on wrong-way credit bets linked to Liberty Global Inc.’s Cablecom Holdings, prompting another ouster for Barnum. In a statement at the time, a senior BlueMountain executive said Barnum’s exit was “mutually agreed.”
Then came the uncanny turnaround. JPMorgan gave Barnum a second chance and a new mission: Instead of making wagers himself, Barnum would use his trading experience and the lessons he learned to help oversee businesses, spot risks and head off trouble. He rejoined JPMorgan in 2007, right as two of Bear Stearns Cos.’ hedge funds were blowing up.
By 2010, Barnum was indispensable to his bosses and on the rise, having helped the firm dodge bullets from the financial crisis. Two years later, Barnum became CFO of the global-markets division, and the following year was elevated to finance chief of the entire corporate and investment bank.
He helped clean up one of Dimon’s biggest headaches — the so-called London Whale trading scandal, in which a group that was supposed to oversee the bank’s excess cash lost billions on botched credit-default swap bets. JPMorgan’s antagonist in the debacle happened to be BlueMountain, Barnum’s former employer. The lender ended up relying on the hedge fund to help resolve the positions and put the issue to rest.
Pinto, who oversees the firm’s investment bank, was named last week to become the sole president and chief operating officer at the end of the year.
And, in the same announcement, Dimon elevated Barnum to CFO.
Some are keen to see how Barnum interacts with analysts and investors. He’s known to love a good debate, and is rarely at a loss for words.
“He’s the kind of guy, you would be sitting at a dinner table and talking about Russian politics in 1913, and he would still know more about it than you,” said Shahraab Ahmad, who worked for Barnum during his first stint at JPMorgan.
Elizabeth Warren Labels Dimon ‘Star Of The Overdraft Show’ As Banks Charged Onerous Fees To Customers Struggling During The Pandemic
JPMorgan Chase & Co.’s Jamie Dimon is the longest serving bank chief who testified before Congress Wednesday, but to the Senate’s biggest critic of Wall Street, he’s also “the star of the overdraft show.”
Massachusetts Democrat Elizabeth Warren lit into Dimon, as she sought to make the point that banks kept charging onerous fees to customers struggling during the pandemic — even as regulators in Washington eased rules for lenders. JPMorgan, Warren noted, made almost $1.5 billion from overdrafts last year, seven times more per account than its competitors. Still, it didn’t automatically waive the penalties as the government had suggested.
Dimon, appearing at a Senate Banking Committee hearing featuring the chief executive officers of the six biggest U.S. banks, sharply disputed Warren’s analysis and said JPMorgan dropped its overdraft fees for customers who requested relief.
“I think your numbers are totally inaccurate,” he told the senator as the two talked over each other in a contentious exchange about penalties banks assess when consumers withdraw more cash than they have in their accounts.
Warren, who said banks collectively took in $4 billion in overdraft fees last year, accused Dimon of ducking her question and asked him to return the money. He refused.
“You and your colleagues come in today to talk about how you stepped up and took care of customers during the pandemic, and it’s a bunch of baloney,” replied Warren.
She wasn’t alone in attacking bankers. Senate Banking Committee Chairman Sherrod Brown kicked off the proceedings with a blistering critique, arguing lenders’ business models are “built on short-term profits at the expense of long-term growth for everyone.”
The Ohio Democrat challenged the CEOs to “be as good to the American people as the nation has been to you,” noting that taxpayers spent billions to rescue banks during the 2008 financial crisis. When employees get sick or lose their jobs, they “don’t get a taxpayer bailout.” Brown said. “And they all remember that Wall Street did.”
The remarks set the tone for hours of tough questions on everything from workforce diversity to minority lending and executive pay.
The hearing was the first time the CEOs have been called before the panel — and, much to the chagrin of some in the industry, it may also not be the last. Brown’s title for the event: ”Annual Oversight of Wall Street Firms.”
Among the CEOS testifying with Dimon was Citigroup Inc.’s Jane Fraser, the first women to lead one of the U.S.’s biggest banks. Also appearing were Goldman Sachs Group Inc.’s David Solomon, Bank of America Corp.’s Brian Moynihan, Morgan Stanley’s James Gorman and Wells Fargo & Co.’s Charles Scharf.
They will testify again Thursday before the House Financial Services Committee.
In their opening statements Wednesday, the executives pointed out the leading role that big banks played in getting out billions of dollars in government stimulus and assistance for businesses and homeowners jolted by coronavirus. As for their own firms, the leaders said, they remain well-capitalized and didn’t struggle during the market turmoil caused by Covid-19.
U.S. banks have thrived during the pandemic, with the Federal Deposit Insurance Corp. putting out a report Wednesday that showed the industry made $76.8 billion in the first quarter, shattering all previous profit records. Much of the earnings came from lenders releasing reserves that were set aside last year for potential losses that never materialized.
Democrats weren’t the only lawmakers who faulted banks, as Republicans pointedly questioned decisions to curtail lending to politically unpopular businesses such as gun manufactures and oil companies. Senator Pat Toomey, the top GOP member of the Banking Committee, said corporations shouldn’t pursue social agendas that risk hurting shareholder returns.
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