The Crypto Currier - 15th November 2022

This week's biggest news in blockchain and crypto in the Crypto Currier:?

In one of the most tumultuous weeks in crypto, the formerly second largest crypto exchange FTX collapsed, with a potential rescue deal from competitor Binance ending in 48 hours. The exchange is now facing criminal misconduct charges in the Bahamas, questions are being thrown around about what this means for crypto regulation, and the entire industry is bearing the brunt. Investors face huge losses with FTX's $8 billion shortfall, and other exchanges are being pressured into sharing proof of their reserves, leading to some cases of mass withdrawals amidst distrust.

NY Federal Reserve, Singapore’s MAS partner for cross border CBDC

The Monetary Authority of Singapore and the New York Innovation Center (NYIC), part of the?NY?Federal Reserve have announced joint experiments for a cross border?central bank digital currency project, Project Cedar Phase II x Ubin+. The project aims to explore the potential efficiencies of using wholesale central bank digital currencies (CBDCs) for cross border payment. (Ledger Insights)?Read More

Crypto exchange FTX collapse, Binance rescue deal falls apart in less than 48 hours

After FTX, which had formerly been the second largest crypto exchange, announced it would collapse without further help, Binance initially stepped in with CEO CZ announcing his intention to bail out his troubled competitor. However, less than 24 hours after this announcement Binance stated that it would not be pursuing the deal, citing “reports regarding mishandled customer funds and alleged US agency investigations.”. Binance said the issues facing FTX were “beyond our control or ability to help.” Two hours later, FTX's website went back up and has since been live with a banner warning 'FTX is currently unable to process withdrawals. We strongly advise against depositing.' It has since been reported that FTX had?$900 million in easy-to-sell assets but $9 billion in liabilities the day before it imploded. This $8 billion shortfall could see big potential losses for investors.?(Cointelegraph) ?and?(Business Insider)

FTX Faces Criminal Misconduct Probe in Bahamas

Collapsed crypto exchange FTX will be investigated by financial investigators from the Royal Bahamas Police Force. They have confirmed that they are currently working with the Bahamas Securities Commission and looking into possible criminal misconduct surrounding the surprising implosion of plafform. "In light of the collapse of FTX globally and the provisional liquidation of FTX Digital Markets Ltd., a team of financial investigators from the Financial Crimes Investigation Branch are working closely with the Bahamas Securities Commission to investigate if any criminal misconduct occurred," the Royal Bahamas Police Force said. The Bahamas Securities Commission have frozen FTX's assets and suspended its registration to "preserve assets and stabilize the company." (International Business Times)?Read More

'FTX Has Been Hacked': Outflows Exceeding $600M

FTX officials appeared to confirm rumours that the exchange had suffered a $600 million hack, instructing users to delete FTX apps and avoid its website, in the latest saga for the bankrupt exchange. Over $600 million was siphoned from FTX's crypto wallets on Friday, soon after which the exchange stated in its official Telegram channel "FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Don't go on FTX site as it might download Trojans". Members of the crypto community have however been?speculating that the outflows could have been coordinated by a member of?CEO Sam Bankman-Fried's inner circle. (CoinDesk)?Read More

FTX's?empire reportedly run by 10 roommates in the Bahamas who dated each other

CoinDesk, the site that brought about the downfall of FTX by leaking that the balance sheets of FTX and sister company Alameda Research has assets that were largely wrapped up in FTT, the in-house?crypto?token of FTX, has now reported that?FTX?was run by a "cabal of roommates." CoinDesk has said that the ten roommates also were reportedly in and out of dating relationships with each other. This latest revelation set off a panic among traders bringing the price of FTT crashing down. Of the management, CoinDesk said "The whole operation was run by a gang of kids in the Bahamas". The consensus among all the sources was that "It's a place full of conflicts of interest, nepotism and lack of oversight" CoinDesk said. (Business Insider)?Read More

$3 billion in?Bitcoin?left exchanges this week amid FTX contagion fears

Bitcoin (and other cryptocurrency) investors are withdrawing funds from exchanges at a rate not seen since April 2021. Nearly $3 billion in?Bitcoin has been?withdrawn over the past seven days with on-chain analytics firm?Glassnode?showing almost 90,000 wallets have received BTC from exchange addresses. This is a sign of crypto holders losing trust in centralised crypto exchanges as a model and worried about the security of their funds. (Cointelegraph)?Read More

Crypto exchanges under fire for allegedly sharing snapshots using loaned funds

Several crypto exchanges are coming under fire amidst rising distrust from investors following the FTX collapse. To counter this mistrust, crypto?exchanges have started sharing proof of reserve with the public as a way to showcase legitimacy. However, these public displays have shown certain anomalies during on-chain investigations which investors say suggest foul play and market manipulation. Two days after?Crypto.com made its cold storage information public, investigators found that 320,000 Ether was sent to?Gate.io?on Oct. 21, 2022, with crypto .com's CEO saying?the funds were transferred accidentally and were eventually returned back ?to the original storage. Nonetheless, this led to many investors withdrawing their Eth. When Gate.io released its proof of reserves snapshot, Solidity developer Shegen alleged that the funds shown were those that?Crypto .com had supposedly accidentally sent. The?crypto?community also suspects?Huobi?of attempting a similar manipulation. A wallet address?linked ?to the exchange was found transferring 10,000 ETH to Binance and OKX deposit wallets soon after releasing its asset snapshot. A blockchain?investigator showed?transactions ?on Etherscan, which shows that Huobi had shown 14,858 ETH in its latest snapshot, which since went down to 2,463.5 ETH. (Cointelegraph)?Read More

Huobi Asset Transparency Report Reveals $3.5B in?Crypto?Holdings

Huobi Global, once China's top crypto exchange, has published an asset transparency report to reassure users that its funds remain safe. The report said the exchange has total estimated value of reserves of $3.5 billion. The exchange has promised to perform a Merkle Tree Proof of Reserves audit with a third party within 30 days. This comes days after FTX, which until recently was the third largest digital assets exchange by volume, imploded in response to a?CoinDesk report ?that showed its sister company Alameda Research's balance sheet was primarily made up of FTX's native token, FTT. (CoinDesk)?Read More

Trading volume plunges 75% on Coinbase, but could benefit from FTX’s Bankruptcy

Trading volume on crypto exchange Coinbase plunged roughly 75% in the hours following FTX’s bankruptcy announcement early Friday,?according to data from Nomics . The ongoing crypto winter, but most specifically, the increasing distrust in any centralised crypto exchanges following a few major collapses, has led to less retail investors wanting to trade, and many to want to withdraw their crypto to safer cold storage options. There is a chance for Coinbase to pick up market share since the collapse of FTX. (CoinDesk)?Read More

Sam Bankman-Fried denies rumours that he fled to Argentina

FTX founder Sam Bankman-Fried has denied rumours that he’s fled the Bahamas for Argentina since the collapse of his FTX Group. He denied the rumours in text message to Reuters. Users have been speculating whether SBF was on the run after?filing for Chapter 11 bankruptcy ?for FTX Group, amidst speculation that flight trackers had traced his private jet using the flight tracking website ADS-B Exchange. Lots of rumours are currently circulating… (Cointelegraph)?Read More

Miami HEAT Arena Balks at FTX Naming Rights, Ending 19-Year Deal Early

Miami HEAT Arena has reportedly started taking down FTX sponsorship logos, for which FTX had paid $135 million for a 19 year sponsorship contract.?Photos on social media already seem to show the FTX signs being removed from the arena. A few hours after FTX filed for bankruptcy, the Miami HEAT and Miami-Dade County issued a joint statement announcing they were cutting ties with the exchange, effective immediately. “The reports about FTX and its affiliates are extremely disappointing. Miami-Dade County and the Miami HEAT are immediately taking action to terminate our business relationships with FTX, and we will be working together to find a new naming rights partner for the arena,” a press statement issued Friday reads. (CoinDesk)?Read More

Crypto?lender BlockFi suspends withdrawals in FTX contagion

Digital asset lender BlockFi is yet anther platform to be affected by the collapse of FTX. The?crypto?lender had given an unspecified amount of loans to Alameda Research. BlockFi reportedly had been in the process of moving its assets to FTX for custody, according to a person familiar with the matter, who added that the majority of BlockFi's assets had not yet been moved. BlockFi, once worth $3 billion, has?said ?it will pause client withdrawals, citing "a lack of clarity" over the status of FTX US and?FTX.com . The New Jersey-based company asked customers to refrain from depositing funds into their BlockFi wallets or interest accounts. (American Banker)?Read More

Binance holds $74.7b of?crypto?in its reserves, ~40% are in the firm's own tokens

A Bloomberg report claims that crypto exchange Binance holds $74.7 billion worth of crypto in its reserves of which roughly 40% are in the firm's own stablecoin and native token. Co-founder CZ (Changpeng Zhao) said that Binance would be more transparent and provide proof of reserves.?According to the report, of its total reserves, $23 billion was in BUSD and $6.4 billion was in Binancecoin. Binance also held 10.5% of its reserves in bitcoin and 9.8% in ether.?(Business Insider)?Read More

Crypto.com's Preliminary Glimpse of Token Reserves Reveals 20% in Shiba Inu Coin

As large crypto exchanges have been pushed to prepare “proof-of-reserves” audits, an initial report has shown 20% of Crypto.com’s reserves to be in the dog-inspired meme token, SHIB. This sparked a bank run on the exchange, with Sunday seeing a huge number of withdrawals. It also looks as if the exchange is taking a few measures to slow down the flow of withdrawals. Crypto .com shared wallet addresses with blockchain analysis firm Nansen to?show $2.88 billion in and other assets of which roughly $558 million, or about 20%, are in SHIB. The exchange's SHIB holding ranks second only to the $872 million of bitcoin which represents 31% and exceeds the $487 million in ether. (CoinDesk)?Read More

Genesis to Get $140M Equity Infusion from Parent Company?after $175M locked in FTX

Cryptocurrency?brokerage?Genesis?will reportedly get an equity infusion of $140 million from its parent company after its derivatives business has $175 million locked in a trading account of FTX, which has filed for bankruptcy protection.?Genesis sent an email saying “While the operation of our lending and trading businesses has not been impacted by recent market events, Genesis has taken steps to strengthen its balance sheet with an additional equity infusion of $140M from our parent company,?Digital Currency?Group”. (Pymnts)?Read More

Crypto?Fund Galois Capital Has Half of Its Capital Trapped on FTX

Crypto fund Galois Capital has said it has about half of its capital trapped on now bankrupt exchange FTX. The locked funds total around $40 million, according to co-founder Kevin Zhou.?Galois has said it could take “a few years” for the firm to recover “some percentage” of its funds. “We will work tirelessly to maximize our chances of recovering stuck capital by any means,” Zhou told investors. Galois earned acclaim earlier this year for predicting the crash of stablecoin ecosystem Terra. (CoinDesk)??Read More

FTX US Warns of Trading Halt Hours After Bankman-Fried Says It's '100% Liquid'

The US branch of failed crypto exchange FTX, FTX US, warned its users to close their positions as it might halt trading in the coming days hours after tweeting that FTX US was "100% liquid ," in contrast to FTX International. "Announcement 2022-11-10: trading may be halted on FTX US in a few days. Please close down any positions you want to close down. Withdrawals are and will remain open. We will give updates as we have them," a banner on?its website?said. Soon after, the entire FTX Group folded into bankruptcy, locking all users' funds. (Coindesk)?Read More

A crypto lawyer's take, by?Charles Kerrigan CMS

We’re at a fork in the road.?Retail customer facing exchanges will see lot of pressure from regulators.?Choices will most likely be: be regulated, or DeFi.?The space in between will get difficult. The EU will see these events as making the case for MiCA, which assumes that banks are a safe place for the market to develop.?For lawyers, the litigation on the customer terms that say the company holds “your” crypto” is the big point.?What does this mean??The worst position for a customer is to be an unsecured creditor of a bust company.?That’s what you will be if you sent funds to FTX and they had permission to use it and owe you the balance represented by the underlying tokens you “invested” in.?The best position for a customer is that the tokens you invested in are yours, because the terms say so and nothing else in the relationship changes that.?In this case, you can track?your?assets through transactions that FTX put them through but you didn’t authorise.?All this is about the same point that caused a fuss when?Brian Armstrong explained it to much controversy in May .

FTX Collapse Has US Regulators Sharpening Pencils

The crypto exchange’s stunning collapse and bankruptcy filing has US regulators and lawmakers making the case for an even more burdensome regulatory framework for crypto. Nevermind that the SBF-championed legislation would dismantle De-Fi while creating a regulatory wall around existing centralized exchanges. Senator Elizabeth Warren?tweeted ?in support of stricter rules. (Zed Tarar )?Read More at Bankless

Frauds and Scams Make up 40% of?Crypto?Complaints

40% of?crypto-asset complaints handled since 2018 were about frauds and scams. "Hacks by malicious actors have marred?crypto-assets, and led to significant financial loss by consumers with no recourse for recovering stolen funds," the US Consumer Finance Protection Bureau said. The CFPB also cited other risks including romance scams, fraudulent transactions and greater market volatility. Crypto?hacks have cost users $3 billion in the first 10 months of 2022. Hackers stole $730 million this October alone. One imagines bad centralised crypto exchanges will form the majority of complaints for the rest of this year. (Pymnts)?Read More

Nike Dives Deeper Into Metaverse With ‘.Swoosh’

Nike is doing more in the metaverse by launching a new blockchain-powered meeting place for athletes, collectors, creators and consumers called 'Swoosh'. The platform will allow Nike to share its virtual creations including?shoes and jerseys ?for users to wear in digital games. “We are shaping a marketplace of the future with an accessible platform for the Web3-curious,” said?Ron Faris, general manager of Nike Virtual Studios. (Pymnts)?Read More

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