Highlight of the Week
SEC Crypto Crackdown
- The Securities and Exchange Commission filed lawsuits against both Binance and Coinbase this week. Alleging the two companies operate illegal securities exchanges.
- In the wake of the FTX scandal and other failed crypto exchanges, the SEC has moved to regulate the industry and prevent fraud. FTX filed for bankruptcy in November of last year and claimed to have lost $8 billion of customer funds.
- In the suit against Binance the SEC also names Sigma Chain AG and Merit Peak, both are affiliated market makers allegedly owned by Binance CEO Changpeng Zhao. The SEC accuses these firms of wash trading and the diversion of customer assets on the platform.
- The legal question at play in both lawsuits is whether crypto tokens are to be defined as securities and thus being illegally traded on both exchanges.
Rate Curves
Rapid Report:
- Mortgage loan originations have slowed down since hitting $1.2T in June 2021. Last quarter marked the lowest recorded origination levels for homebuyers with credit scores below 760.
- Rates for a 30-year fixed mortgage currently sit at 6.79% and with slowing demand prospective homebuyers are holding out hope for a decrease in prices. Due to shortages in the supply of existing homes, prices have increased in the past two months. New home construction projects are looking to fill the supply gap after pausing amidst the increasing rate environment of the past year.
- For current homeowners, the decision not to sell is also heavily dependent on current interest rates. Two years ago, those that locked in a rate at around 3% with a $60K down payment (assuming 20%), would now need to put down $144K to afford the same price of home ($300K) and have the same $1K/month payment.
