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A U.S. Debt Default Will Impact Your Finances and Investments – Here’s How

In the unlikely case the U.S. defaults on its debt, the consequences will be far-reaching. Here are 5 ways a U.S. debt default would impact your walle…

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Were the U.S. to default on its debt it would cause severe hardship to American families, harm our global leadership position, raise questions about our ability to defend our national security interests and, importantly, negatively affect your wallet whether you are a welfare recipient, stock or bond investor, home owner or currently employed.

By Lorimer Wilson, Managing Editor of munKNEE.com – Tour KEY to making money!

  1. A debt default:
    • could delay payments for programs like Social Security, Medicare, Medicaid, SNAP, and others, in full or in part, affecting:
      • the more than 70 million disabled or retired Americans who rely on timely monthly Social Security checks, and
      • the more than 40 million people who receive government food assistance.
  2. According to Moody’s Analytics, a debt default:
    • could cause the unemployment rate to increase to 5% were the U.S. government to breach the debt limit by only a few days and
    • could cause the unemployment rate to jump to 8% were the breach to drag on for several weeks.
  3. According to Mark Zandi, Moody’s chief economist, a debt default:
    • would spike interest rates further and it
    • would likely spark a recession.
  4. According to Jeff Tucker, a Zillow senior economist, a debt default:
    • would cause home sales to plummet,
    • would cause mortgage rates to climb to as high as 8.4%, and it
    • would cause mortgage bills to soar by over 20%.
  5. According to Jonas Goltermann, a markets economist at Capital Economics, a debt default:
    • would cause stock prices to plummet by 20%, on average, under a prolonged default scenario, and,
    • could cause the markets to fall sharply even if the U.S. doesn’t default but lawmakers delay acting up to the last moment.
  6. Any default:
    • would undermine U.S. Treasuries as an ultra-safe asset causing prices to plummet and demand to crater.

Make no mistake about it, a debt default by the government would adversely affect you one way or another.

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Ferrari to accept crypto payments in the US

Ferrari’s decision to accept cryptocurrency payments was driven by market demand and dealer requests, with numerous clients investing in digital currencies.
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October 14, 2023

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Ferrari’s decision to accept cryptocurrency payments was driven by market demand and dealer requests, with numerous clients investing in digital currencies.

Ferrari will accept cryptocurrency payments for its luxury sports cars in the United States due to customer demand. The carmaker also plans to accept crypto payments in Europe.

According to an Oct. 14 report from Reuters, Ferrari’s chief marketing and commercial officer, Enrico Galliera, confirmed the intentions of the luxury car brand. Ferrari’s choice to accept cryptocurrency payments was driven by market demand and dealer requests, with numerous clients, including crypto-savvy young investors, having invested in digital currencies.

Although Galliera didn’t specify the number of cars Ferrari expects to sell via crypto payments, he reportedly stated that the carmaker’s strong order portfolio is fully booked until 2025. Ferrari aims to test this expanding market to connect with potential buyers beyond its usual clientele. The luxury automaker plans to introduce cryptocurrency payments in Europe by the first quarter of 2024 and expand to other crypto-friendly regions after.

For its initial phase in the U.S., Ferrari has reportedly partnered with major cryptocurrency payment processor, BitPay. This collaboration enables transactions in Bitcoin (BTC), Ether (ETH) and USD Coin (USDC).

Galliera confirmed that there will be no additional fees or surcharges when using cryptocurrency, as BitPay will promptly convert cryptocurrency payments into conventional fiat currency for Ferrari’s dealers, ensuring they are shielded from cryptocurrency price fluctuations.

BitPay will also verify the legitimacy of the digital currency, ensuring it does not originate from illicit activities, money laundering or tax evasion.

Related: Madeira announces creation of Bitcoin business hub for innovation

Many large corporations have hesitated to adopt cryptocurrencies due to their price volatility and associated transaction impracticality. Among these companies is Tesla, the electric vehicle manufacturer, which initially started accepting payments in Bitcoin in 2021. However, CEO Elon Musk suspended this payment method due to environmental concerns.

Magazine: The Truth Behind Cuba’s Bitcoin Revolution: An on-the-ground report

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Caroline Ellison wanted to step down but feared a bank run on FTX

Former Alameda CEO Caroline Ellison recognized she wasn’t doing a good job months before the company filed for bankruptcy, but Sam Bankman-Fried persuaded…

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October 14, 2023

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Former Alameda CEO Caroline Ellison recognized she wasn’t doing a good job months before the company filed for bankruptcy, but Sam Bankman-Fried persuaded her to stay.

Caroline Ellison wasn’t doing a good job leading Alameda Research in 2022, and she did not hide it. Excerpts from her personal notes shared as evidence by prosecutors in Sam Bankman-Fried’s trial revealed details about the trading firm’s struggles and its CEO’s desire to resign weeks and months before FTX collapsed.

Ellison spent over 10 hours testifying during Bankman-Fried’s trial this past week, notably entering through the front doors of the United States District Court for the Southern District of New York in Manhattan, joined by her attorneys. Ellison said she had not seen Bankman-Fried since the crypto empire failed in November 2022, but their communication had eroded months before.

In April 2022, their romantic relationship ended, and Caroline started avoiding meetings with Bankman-Fried even though they still lived in the same luxurious apartment in the Bahamas. Alameda’s growing liabilities with FTX and the breakup with Bankman-Fried made her consider leaving the company altogether.

“I feel like neither [Sam] Trabucco nor I have been doing a great job of pushing on stuff,” she wrote in the document to Bankman-Fried, which was shared as evidence during her cross-examination by the former FTX CEO’s defense counsel.

Bankman-Fried asked her to stay on, saying that her departure could create rumors about Alameda’s financial health, thus harming FTX’s credibility, so Ellison remained CEO.

Ellison joined Alameda as a trader in 2018. By 2020, she handled most of the company’s operations, while Bankman-Fried focused on his newly launched crypto exchange, FTX. In August 2021, she became co-CEO alongside Sam Trabucco, who stepped down a few months later, leaving her in charge of the company. In August 2022, Trabucco officially resigned as co-CEO.

Ellison was against creating FTX, she revealed. “I didn’t think of myself as ambitious before I started at Alameda, but I believe I became more ambitious” under Bankman-Fried’s incentive, she said.

As CEO, Ellison was in charge of handling Alameda’s crypto lenders. In mid-2022, after the Terra ecosystem failed, the company’s open-term loans stood at $1.3 billion. The market downturn drained liquidity from crypto assets, prompting Alameda’s lenders to demand loan repayments.

According to Ellison, Bankman-Fried instructed her to keep repaying creditors via Alameda’s line of credit with FTX. In other words, Alameda would use FTX’s customer assets to repay crypto lenders. At the time, its line of credit with the exchange stood at $13 billion.

As lenders demanded loan repayments and Alameda’s balance sheets, Bankman-Fried suggested Ellison use “alternative means” for presenting the company’s financials. In the following months, Ellison would create many additional versions of a balance sheet to deceive creditors.

Early in November 2022, an alternative version of Alameda’s balance sheet was leaked. Ellison was on vacation in Japan at the time, but she had to travel to FTX Hong Kong’s office to deal with the company’s crisis.

While the balance sheet data didn’t reflect the company’s reality, it was enough to spread rumors and trigger a bank run on FTX a few days later, exposing an $8 billion gap between the companies.

Having cooperated with the U.S. Department of Justice since December 2022, Ellison will soon receive her sentence regarding the seven counts of fraud and conspiracy to commit fraud she was charged with.

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ProShares prepares to launch unique Short Ether Strategy ETF

ProShares’ SETH ETF will start trading soon, following the first Ethereum futures ETFs by about two weeks.
ProShares introduced a trio…

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4 hours ago

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October 14, 2023

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ProShares' SETH ETF will start trading soon, following the first Ethereum futures ETFs by about two weeks.

ProShares introduced a trio of Ethereum futures ETFs in the recent weeks. Presently, the company is gearing up to provide a distinctive offering.

ProShares' Short Ether Strategy ETF (SETH) from the fund group is poised to commence trading shortly, following the debut of the initial Ethereum futures ETFs by about two weeks.

SETH, scheduled for listing on the NYSE Arca exchange, aims to achieve daily investment outcomes that mirror the inverse of the daily S&P CME Ether Futures Index performance, as indicated in a filing made on Friday, Oct. 13.

The fund does not engage in direct shorting of ether (ETH); rather, it seeks to capitalize on potential declines in the asset's value, as stated in the prospectus. On Friday, the price of ETH stood at approximately $1,540, reflecting a decrease of approximately 6% over the past week.

Screenshot of the ProShares SETH filing     Source: SEC

ProShares anticipates that the registration statement for SETH will become effective on Oct. 15 and plans to introduce the fund in early November, as reported by Blockworks.

However, the three existing ProShares ether futures funds — including two that invest in both ether and bitcoin futures contracts — debuted on Oct. 2 alongside similar products by VanEck and Bitwise.

The US Securities and Exchange Commission approved ether futures ETFs two years following the introduction of the initial bitcoin futures ETF, the ProShares Bitcoin Strategy ETF (BITO), which entered the market in Oct. 2021.

Related: SEC reportedly won’t appeal court decision on Grayscale Bitcoin ETF

ProShares continued its release of bitcoin futures ETFs with the Short Bitcoin Strategy ETF (BITI) in June 2022. As of now, BITO has accumulated around $850 million in assets, while BITI has approximately $75 million.

In August, Cointelegraph reported that Ether futures ETFs may be approved in October, causing an 11% spike in ETH prices at the time.

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