The receiver for imploded hedge fund manager Traynor Ridge Capital Inc. has named National Bank of Canada and JonesTrading Canada Inc. as “potential creditors” of the company.
Ernst & Young LLP says the two companies, not previously linked to Traynor Ridge Capital (TRC), are joined by Echelon Wealth Partners and Virtu Canada Corp. as creditors. EY says it cannot currently estimate the amounts the four are owed.
The Ontario Securities Commission (OSC) put a cease-trade order on Traynor Ridge in late October after the sudden death of its founder, owner and chief executive Christopher Callahan. The OSC said three investment dealers executed trades for Traynor Ridge, then could not collect payment for the securities. The OSC estimated at the time that the dealers have potential losses totalling approximately $85-million to $95-million.
EY noted Mr. Callahan was TRC’s sole director, officer and shareholder. “As the debtors have no other management, the receiver is still working to obtain all of the relevant books and records” and to identify all the creditors.
Virtu and Echelon emerged publicly as two of the three introducing brokers that executed Traynor Ridge’s trades. Virtu Canada Corp. sued Traynor Ridge, estimating it has losses of at least $5-million. And Echelon Wealth Partners Inc. placed a $30-million lien on the assets of Traynor Ridge, its funds and Mr. Callahan. Echelon CEO David Cusson told The Globe and Mail the lien covers the original value of the trades, not the losses incurred.
JonesTrading Institutional Services LLC, the Canadian company’s California-based parent, describes itself as a “highly differentiated independent broker dealer and investment bank providing a wide range of services” including multiple types of trading. A media representative for JonesTrading has not responded to multiple queries from The Globe starting in late October.
National Bank’s role with Traynor Ridge is unclear. Matthieu Charest, a spokesperson for National Bank of Canada, declined to comment other than to say “any potential financial impact would be immaterial to the bank.”
The OSC, in its request for a court-appointed receiver, said CIBC World Markets and BMO Nesbitt Burns Inc. served as prime brokers for Traynor Ridge’s funds. In its lawsuit, Virtu said Traynor Ridge used prime brokerage accounts at CIBC and TD Securities Inc.
EY says it is in the process of taking possession of the property of Traynor Ridge and its funds and it has already frozen their bank and brokerage accounts.
Earlier this week, the OSC said it was extending the cease-trade order it imposed Oct. 30 to Feb. 8 of next year. In the staff’s application for the order, it noted OSC enforcement staff are investigating Traynor Ridge’s trading activities because a preliminary review “shows some trading without any change in beneficial or economic ownership.”
Mr. Callahan founded Traynor Ridge in 2020. He previously worked as an associate portfolio manager at HGC Investment Management Inc. and as an analyst at Echelon, the broker that filed the lien against Traynor Ridge. He graduated from Queen’s University in 2014.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
