The Crypto Currier 24th January

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

Genesis Global Trading has filed for bankruptcy. According to the bankruptcy filing, Genesis has over 100,000 creditors to which it owes $3.5 billion. Gemini's Cameron Winklevoss is threatening legal action against parent company DCG and CEO Barry Silbert for the money owed to Gemini. The new CEO of FTX has said the failed exchange could possibly be revived, whilst the liquidators controlling the wallet for FTX sister company Alameda Research have managed to lose up to $11.5 million in crypto whilst under their control. And, the founders of failed hedge fund Three Arrows Capital are looking to raise $25 million for a new exchange to trade in assets lost to failed crypto ICOs and other failed crypto projects. It'll be called GTX, “because G comes after F". Whilst they're on the run from the police.

New FTX CEO: the failed?exchange could be revived and resume normal operations

?New FTX CEO John Ray III has suggested there might be a chance of reviving the exchange and returning to pre-collapse operations. He said some have praised the platform with some shareholders seeing it as a "viable business". He has been searching for assets to pay off FTX shortfalls, including the $8 billion owed to its customers. This has included setting up a task force to look into restarting FTX.com, the international part of the exchange. Ray has said "Everything is on the table". "If there is a path forward on that, we will not only explore that, we'll do it." He also warned it could be months for the money to be tracked down as FTX had virtually "no record keeping whatsoever" and used QuickBooks to run its multibillion-dollar business. (Business Insider)?(Read More)

Alameda wallet under liquidator control incurred $11.5M in losses

?The liquidators of Alameda Research have reportedly incurred at least $11.5 million in losses since taking control of its trading accounts. A Twitter thread from Arkham Intelligence reported that one wallet under the control of liquidators has seen a string of "significant losses" due to liquidations, of which it claims $4 million were "preventable losses." In one trade, for example, had the liquidators used a function to immediately close the position by selling off collateral instead of pulling collateral from the wallet, at least $15 million could have been preserved rather than the recovered $11 million. Not ideal.?(Cointelegraph) Read More

FTX recruited customers in Africa by saying crypto?would protect them from inflation

?FTX reportedly promoted itself heavily in Africa by hosting exclusive events and offering African customers a $5 sign-up bonus. The failed exchange said that crypto could protect people's money from inflation, promising that its dollar-pegged stablecoins were safer investments than local currencies. This could perhaps have been true, had the exchange not acted fraudulently and collapsed. Many international customers lost all of their money when the exchange collapsed in November. (Business Insider) Read More

The tiny rural bank which Alameda bought an $11.5 million stake in is giving up its?crypto?and weed ambitions to return to its community roots

Until 2022, tiny American rural bank Farmington State Bank had 3 employees. The town of Farmington. Washington, where it is based, has just 146 residents. In 2010, local paper?The Spokesman Review?described the bank as being "strictly no-frills" because it didn't offer even credit cards or online banking, specialising in agricultural loans to farmers. In 2020, the bank was purchased by FBH, a company owned by Jean Chalopin, who also owns Bahamas based Deltec Bank which hasn't been controversy-free for its relationship with Tether.?Then, in 2022, Sam Bankman-Fried's Alameda research invested $11.5 million for a 10% stake, despite the entire bank then only having a net worth of $5.7 million. It started trading as Moonstone Bank and said it aimed to serve digital assets and the cannabis industry. Since the collapse of FTX and SBF's arrest, the bank has given up its crypto and cannabis ambitions and will return to being a community bank. Probably for the best. (Business Insider) Read More

3AC co-founders seek millions to fund a new ‘GTX’ exchange

In possibly the most crypto thing to happen to crypto yet, the founders of failed crypto fund Three Arrows Capital (3AC) are looking to raise?$25 million for their new venture GTX. GTX is ironically focused on what they claim to be helping people who have lost money to failed ICOs and other failed crypto projects, a subject they are very familiar in. The name comes, according to its leaked pitch deck — “because G comes after F".? And FTX is also now bankrupt. They say GTX is just a placeholder name, but, we'll see. It reportedly plans “fill the void created by FTX” while trading FTX and other crypto debt claims and says it plans to unlock about $20 billion of crypto debt claims. We'll see. GTX has reportedly received investment from CoinFlex. Founders Kyle Davies and Su Zhu say they are not on the run from authorities, but are wanted by the police and have not been located. Probably fair to say this is not a low-risk venture and prospective investors might be safer if they run away screaming. (Investing.Com) and (The Verge)

DCG’s?crypto-lending subsidiary Genesis files for Chapter 11 bankruptcy

Crypto lender Genesis Global Trading has filed for Chapter 11 bankruptcy. Genesis Global Holdco, a subsidiary of crypto conglomerate Digital Currency Group (DCG), and two of its lending business subsidiaries, Genesis Global Capital, and Genesis Asia Pacific, filed voluntary petitions for bankruptcy in the Southern District of New York court. The company has over $150 million in cash which it plans to use as liquidity to support its ongoing operations and facilitate its restructuring process. This follows a series of attempts to stay afloat, including trying to raise capital and cutting 30% of its staff in early January. Genesis lost money in the collapses of Three Arrows Capital and FTX. (TechCrunch)?Read More

Genesis Owes Over $3.5B to Top 50 Creditors

According to the bankruptcy filing, Genesis has over 100,000 creditors among the three of its companies that declared bankruptcy. Crypto exchange Gemini, trading giant Cumberland, Mirana, MoonAlpha Finance and VanEck’s New Finance Income Fund are among its 50 largest creditors. Genesis stated that the filing is a "strategic [action] to achieve a global resolution to maximize value for all clients and stakeholders and strengthen its business for the future." (CoinDesk) Read More

Gemini's Cameron Winklevoss Threatens Legal Action Against DCG CEO After Genesis Bankruptcy Filing

Gemini CEO Cameron Winklevoss has threatened to sue Digital Currency Group CEO Barry Silbert and DCG over the repayment of a $900 million loan. The threat was tweeted after Genesis filed for Chapter 11 bankruptcy. Winklevoss has called bankruptcy a “crucial step” toward recovering Gemini users’ assets but still intends to sue DCG, Silbert and Genesis unless Silbert makes a "fair offer" to Gemini's creditors. This follows a weeks-long public spat between the two men over the repayment of the loan. Crypto lender Genesis Global Capital has disputed some of Gemini's claims in its voluntary petition for bankruptcy protection, stating that the $900 million loan is the net proceed from the foreclosure of certain assets and disputes whether the foreclosure satisfied applicable law. (CoinDesk) Read More

Gemini’s?Bitcoin?Inflows From Other Exchanges Dropped to Roughly Six-Year Low

Inflows to Gemini suggests that traders may be finding the exchange to be less desirable than other exchanges, according to analysts. Blockchain data from CryptoQuant reveals a recent slowdown in incoming bitcoin transfers to Gemini from accounts at other exchanges, down from roughly 1,100 BTC to 2,300 BTC about six months ago to an average of 106.5 BTC on Jan. 8. This is the lowest in almost six years. Analysts see this as a possible sign that some have become more cautious about sending their assets to Gemini. (CoinDesk) Read More

Nexo to Pay $45M, Cease Offering Earn Interest Product in SEC Settlement

The U.S. SEC has charged crypto lender Nexo with failing to register the offer and sale of its Earn Interest Product and has imposed a $22.5 million fine on the company. Nexo has also agreed to pay another $22.5 million to settle similar charges by state regulators. In December 2022, Nexo voluntarily halted access to its EIP in eight states and stopped signing up any new U.S. customers. It had also already off-boarded clients in two other states. Nexo is also facing regulatory issues in Bulgaria, where authorities are investigating the company on suspicion of alleged money laundering, tax offences, banking without a license, and computer fraud, though some have claimed these investigations are more politically motivated than anything else. (CoinDesk) Read More

Nexo Sues Cayman Island's Regulator for Denied VASP Registration

Nexo has filed a lawsuit against the Cayman Islands Monetary Authority to overturn its rejection of Nexo's application to register as a virtual asset services provider (VASP), according to a court document filed last week. The regulator initially rejected the company's application, citing "insufficient documentation on customer risk assessment and enterprise risk assessment" plus deficiencies in anti-money laundering procedures as several of the reasons. Nexo argued that the grounds of the application were not "satisfactory" nor "sufficiently detailed." (CoinDesk) Read More

SEC charges Mango Markets exploiter for allegedly stealing $116M in?crypto

The US SEC has filed charges against Avraham Eisenberg for alleged market manipulation of Solana-based DeFi Platform Mango Markets. The SEC alleges that Eisenberg had worked out a way to exploit the smart contract to steal $116 million worth of crypto.? He had allegedly executed a series of large MNGO purchases to artificially raise the price of the token relative to stablecoin USDC, before draining the assets from Mango Markets.The SEC's head of Crypto Assets and Cyber Unit, David Hirsch, said: "Eisenberg engaged in a manipulative and deceptive scheme to artificially inflate the price of the MNGO token, which was purchased and sold as a crypto asset security, in order to borrow and then withdraw nearly all available assets from Mango Markets, which left the platform at a deficit when the security price returned to its pre-manipulation level".?The SEC has charged him with violations of the anti-fraud and market manipulation provisions of securities laws. Some say he was just exploiting a flaw in the code, but this seems to be a case of law enforcement taking traditional market manipulation laws to DeFi. (Cointelegraph) Read More

Ransomware is getting less lucrative as victims stop paying

Ransomware attacks appear to have seen a 40% decrease in the amount of money earned by cybercriminals. $456.8 million in crypto was sent to known ransomware groups in 2022. This is down from $766 million in 2021 and $765 million in 2020. Numbers might not be conclusive however. Crypto analytics company Chainalysis say it's impossible to know if all wallets have been found and tracked, with some organisations not reporting falling victim to ransomware. Chainalysis researchers note that the decrease in payments is not due to fewer successful ransomware attacks, with threat actors being as successful as ever with over 10,000 different strains circulating on the internet. Rather, it looks like businesses are becoming less likely to pay to get their data back. It also seems that ransomware groups aren't necessarily sticking to one variant of malware, with the same wallets receiving payments from victims infected with different strains. (TechRadar) Read More

Decentralized forex will reduce cost by as much as 80%: Report

If the foreign exchange market were to start using DeFi protocols instead of the current centralised systems, the cost of remittances could be reduced by “as much as 80%", according to a research paper jointly published by Circle and Uniswap. The paper explains that?stablecoins USDC and EUROC traded within a few basis points of exchange rates found in the wholesale forex market for USD and EUR, and showed that the DeFi forex market could provide an alternative to traditional forex despite its smaller trading volume. The researchers used World Bank estimates to compare the cost of remittances through the global banking system to the cost of buying stablecoin. They found that even with all of the added fees, the DeFi model still came to up to 80% less than the average price of remittances. (Cointelegraph) Read More

Bitcoin?On Exchanges Drop By 44%, Could This Fuel More BTC Rally?

The percentage of bitcoin held on centralised exchanges has dropped significantly in the past year, according to a report by on-chain data aggregator Santiment. In January 2022, the BTC held on exchanges accounted for around 11.85% of the total supply. Now it is 6.65% of the supply left on exchanges. This is a result of bitcoin outflows from centralised exchanges due to increasing distrust following the collapse of FTX. More investors are choosing to self-custody, leaving less supply available to be sold active on exchanges. This has worked out to reduce the selling pressure over the last couple of months and made less available to be bought, which seems to be part behind the recent price increase. (NewsBTC) Read More

Putting carbon credits on?blockchain?won’t solve the problem alone

Simply trading carbon credits on the blockchain "doesn't solve a lot" for the environment, without knowing why they are doing it and creating "incentives and drivers", carbon marketplace executives have argued. They say that putting carbon trading on the blockchain only solves a "little bit" of inefficiency. There have been various carbon credit developments in the blockchain space in recent times, including WeWork CEO Adam Neumann's new venture Flowcarbon. (Cointelegraph) Read More

People’s Bank of China Enables Offline Payments with Digital Yuan

Android users can now make offline payments using the People's Bank of China's new digital yuan central bank digital currency. Users can make payments from their smartphone using the CBDC even if the device has no power or no internet connection. Users can also suspend the offline payment function by logging into the app from another phone if they lose their phone. The bank claims Chinese citizens had spent over $14 billion worth of digital yuan as of late October it the latest attempts to roll the CBDC out nationwide. (Pymnts) Read More

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