The Crypto Currier 31st January

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

More findings about FTX - SBF 'invested' $400 million into the fund owned by his friends and flatmates, but it's looking like that was his customers' money and not rightfully his to invest... The (116 page long) FTX creditor list is out, and includes some big names. Turns out there were 5 bids for Celsius that somehow didn't make it to public (or employee) knowledge whilst it would have still been useful. A report claims that it's US institutions driving Bitcoin prices, algorithmic stablecoin marketshare has dropped 10x, not surprisingly given the collosal collapse of Terra Luna's one, and the UK's FCA has issued some (belated) advice for crypto firms.

SBF allegedly used FTX money to invest $400M in obscure VC firm, who he lived with...

U.S. federal prosecutors have alleged that Sam Bankman-Fried used money from FTX to invest in venture capital firm Modulo Capital. SBF's Alameda Research invested $400 million in Modulo in 2022, which raised concerns among regulators due to Modulo's relatively unknown status and the large amount of capital raised during a tough time for the crypto market. The prosecutors claim that the investment in Modulo was likely made with criminal proceeds or misappropriated funds from FTX customers. FTX lawyers are now reportedly eyeing Modulo's assets as they try to recover the billions of dollars owed to their customers, investors, and creditors. Where precisely the $400 million investment went is unclear. Modulo Capital was founded in March 2022 by three former executives from Jane Street, a NY-based firm that had also employed SBF and Alameda CEO Caroline Ellison. One Modulo founder was reportedly only two years out of college. Oh, and it also ran its operations from the same Bahamian condo community where SBF and co lived and played. (Cointelegraph) Read More

FTX Creditor List Features Netflix, Binance, Wall Street Journal

FTX has published a list of creditors including "media companies, airlines, universities, and charities". The 116 page long list, filed as part of the bankruptcy proceedings includes names such as Netflix and Apple, Wall Street Journal, Fortune, Fox Broadcasting and crypto firms including CoinDesk, Coinbase and Binance. Individual creditor names were sealed for three months by Judge John Dorsey who is overseeing the proceedings. The filing states that "inclusion of a name on the Matrix does not necessarily indicate that the party is a creditor of any of the Debtors." A CoinDesk spokesperson explained that CoinDesk is included for "technical reasons" over a podcast sponsorship that was never executed. The filing doesn't show the amount owed to each creditor, but it has been claimed about $3.1 billion to the top 50 creditors. (CoinDesk) Read More

Leaked bids: Binance, Galaxy Digital among secret bidders for Celsius assets

Five crypto firms including Binance, Bank To The Future and Galaxy Digital have reportedly placed bids for the crypto assets owned by Celsius Network, according to crypto blogger Tiffany Fong. The proposals were submitted in November, but were reportedly “for the most part, abandoned”. Fong claimed Binance bid $15 million for the assets, with $12 million for the Celsius estate and $3 million to be distributed to “migrated users on a pro-rata basis.” Galaxy Digital proposed to acquire all illiquid and staked Ether (ETH) assets as it sought to be the “designed stalking horse bidder" for approximately $67 million. Fong added that creditors and “even most employees” have been left in the dark about the bids. (Cointelegraph)?Read More

U.S. Institutions Are Driving?Bitcoin?Prices, Matrixport Research

A report from Matrixport Research suggests that the recent price increases of bitcoin are being driven by U.S. institutional investors. The report notes that over the course of January, Bitcoin is already up over 40%, but more than 35% of those increases happened during U.S. trading hours. The research report concludes that U.S. investors are driving the price, as the data shows that U.S.-based investors are responsible for 85% of the total BTC buying that is happening currently. It concludes that when Bitcoin does well during Asian hours, that Asian retail investors are buying it. (NewsBTC) Read More

DCG Crypto?Platform Luno Sheds 35% of Workforce as DCG cuts 500 jobs

Digital Currency Group owned, London-based crypto exchange Luno has announced that it will lay off 35% of its staff, or more than 300 professionals, in all regions where it operates. Luno CEO Marcus Swanepoel said "2022 has been an incredibly tough year for the broader tech industry and in particular the crypto market. Luno unfortunately hasn't been immune to this turbulence, which has affected our overall growth and revenue numbers." DCG has also had to lay off 500 people across its portfolio companies which include CoinDesk, which it is trying to sell to raise funds to survive the crypto winter, as well as HQ Digital, an asset management company, and now failed crypto lender Genesis. Luno and DCG are not alone in having to lay off staff, many crypto companies have had to do the same in recent months.?(Finance Magnates)?Read More

Algorithmic?stablecoin?market share dropped by 10x from ATH: Report

The market share of algorithmic stablecoins has declined dramatically since its peak in April 2022, dropping by 10x from it's all-time high, according to a report by CryptoCompare. The report claims the market share of algorithmic stablecoins now stands at 1.71%, compared to its all-time high of 12.4% in April. Terra USD was responsible for 79.8% of the algorithmic stablecoin market share before its collapse, which has led to a decrease of trust in this type of asset. The stablecoin market, which the report puts at $137 billion or 12.4% of the total crypto market, has been in decline for 10 consecutive months. In December 2022, centralised exchanges saw a net outflow of $3.65 billion in stablecoins, the largest outflow since November 2021. (Cointelegraph) Read More

US Justice Department seizes website of prolific ransomware gang Hive

Ransomware gang Hive has been dismantled by international law enforcement, after being infiltrated by undercover agents since July 2022, according to the US Department of Justice. International law enforcement groups have recovered over 300 decryption keys for victims since July 2022. One example given was a thwarted attack on a Louisiana hospital that saved the victim from a $3 million ransom payment. Ghost servers were seized on Wednesday. to track ransom payments and dismantle the network's infrastructure. (Cointelegraph) Read More

UK’s FCA Issues Belated Advice for?Crypto?Firms

The UK's FCA (Financial Conduct Authority) has published a list of tips for crypto companies on what they need to consider before, during and after submitting their applications to be registered to operate in the UK. The regulator stressed that being registered is not a one-time task and requires ongoing obligations and interaction with the FCA. The FCA said that crypto companies should provide details of their business model, roles and responsibilities of business partners. They should also demonstrate comprehensive business-wide risk-assessment capabilities and show that the business has policies, systems and controls to manage risk. The regulator has faced fierce? criticism for its strict and highly inefficient registration process for crypto companies which saw only 41 of the 300 companies that applied for registration over the past two years approved. 195 either withdrew their applications or were refused. Many if not most have since given up on registering in the UK entirely and have gone abroad, seeing no reason to return. (CoinDesk) Read More

A crypto lawyer's take by Charlie Kerrigan, CMS : As the story above notes, this has come rather late for the UK industry but that’s how regulation works in practice: gatekeepers guard the gates especially against new people doing new things that can cause loss to individual consumers.?Looking ahead, practical advice like this is helpful.? Alongside it the regulator must ensure it is well enough resourced with experienced enough people to deal with applications in a satisfactory way.

Robinhood’s Twitter Account Hacked, Promotes Scam Token on Binance’s BNB Chain

Hackers got through the social media accounts of US online trading platform Robinhood, to promote a fraudulent coin, RBH, which was built on the Binance Smart Chain. Binance CEO CZ said it appeared the Robinhood account had been hacked, and urged caution in assessing the promotion of a coin on the Binance chain. Robinhood later issued a statement saying it believed the incident was caused by a third-party vendor, and that the unauthorised posts from its social media profiles have since been taken down. Robinhood's social media accounts have 1.6 million followers on Instagram, Twitter, and Facebook but it seems only $16,335 worth of wrapped BNB was exchanged for the scam token in a PancakeSwap liquidity pool, according to BscScan. (CoinDesk) Read More

3 Crypto friendly banks leave the industry

3 banks that previously served the cryptocurrency sector are now exiting the sector. Silvergate Bank, which until recently was the bank for a large number of crypto companies, has reported significant quarterly losses tied to $8.1 billion in withdrawals and is reshuffling its digital asset business offerings, after enquiries around its dealings with now bankrupt FTX and commingling of its funds. Metropolitan Commercial Bank, which served as a banking partner of the now bankrupt crypto brokerage Voyager Digital, and Moonstone Bank, linked to FTX, have both announced that they are closing their crypto business lines and leaving the industry. Metropolitan Commercial Bank said that its decision to exit the crypto market will have minimal financial impact on operations, as crypto clients only account for 1.5% of total revenues and 6% of total deposits. Moonstone Bank, on the other hand, has reportedly had nearly $50 million in deposits seized by federal prosecutors in connection with their investigation into alleged fraudulent activities at FTX and has gone back to it's old name, Farmington State Bank and gone back to its agricultural roots. (Pymnts) Read More

Crucial Day For?Bitcoin: Court Sets Date For Grayscale Vs. SEC

Grayscale's lawsuit against the SEC, in which it is seeking approval to convert its Bitcoin Trust (GBTC) into a spot ETF could be a crucial event in determining the future of Digital Currency Group (DCG) and Grayscale. The SEC denied Grayscale's request, citing concerns about market manipulation and investor protection. The insolvency of DCG's Genesis and uncertainty surrounding DCG and Grayscale have led to a loss of confidence in GBTC, which is currently trading at a 41% discount to its net asset value. DCG has suspended its quarterly dividend and is looking into selling CoinDesk to raise cash and strengthen its balance sheet. The insolvency of Genesis Trading and the uncertainty around DCG seem to have already been priced in by investors. However, the?worst-case scenario ?of the liquidation of Grayscale’s?Bitcoin?Trust (GBTC) with over 630,000 BTC is still a risk. (Bitcoinist) Read More

Crypto Exchange Gemini Cutting Another 10% of Staff: Report?

Gemini crypto exchange is cutting another 10% of its staff. This is its third round of layoffs since June. Gemini has been impacted by the bankruptcy of crypto lender Genesis Global Capital and has been unable to pay out funds to its Earn account holders to which around $900 million is owed, the cause of an ongoing dispute with Genesis parent company Digital Currency Group. Many crypto companies have cut staff in recent months due to the ongoing crypto winter with CoinDesk estimating 27,000 jobs have been lost in the industry since April of last year. (CoinDesk) Read More

Vehicle Titles On Chain? California To Tap Tezos For New Pilot Project

California's Department of Motor Vehicles is launching a pilot program using the Tezos blockchain to manage state records of vehicle ownership. This has been identified by advocates as one where blockchain can add significant value, as it can reinforce immutability, reduce and optimise the necessary manpower in logging changes and updates to records, and reduce potential errors around record changes. The state will be working with crypto software firm Oxhead Alpha to develop the program. California's Chief Digital Transformation Officer Ajay Gupta says the solutions "would avoid repeated verification steps for customer and State/public service entities, resulting in reduced workload, economic benefits and auditability.” (Bitcoinist) Read More

Mode tells customers to remove funds, announces closure

UK-based crypto start-up Mode, has announced that it will be winding down its services due to unsuccessful funding and challenging market conditions. It has asked its customers to remove their funds from the app. Mode raised ￡2 million through the issue of convertible loan notes in July 2022, following positive results in 2021 when the company saw a 261% growth in users and 70% of trading customers being repeat buyers. (Finextra Research) Read More

Copper.co names former UK chancellor Lord Hammond as chair

Former UK Chancellor of the Exchequer Philip Hammond, has been appointed as the chair of a digital asset infrastructure and custody firm Copper.co. He has been serving as a senior advisor to Copper since October 2021. In his new role as chair, Lord Hammond will provide strategic guidance to the firm, which has grown from 50 to 300 employees and expanded its operations globally. He stated that Copper has "pioneered" the use of digital asset investment technology and is becoming the leading option for global financial institutions to trade and secure their digital assets.?(FinTech Futures) 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

Amazon Enters Web3 Jungle With?NFT?Initiative Launching This Spring

Amazon is planning to launch an NFT initiative this spring, according to a Blockworks report. The report cites sources familiar with its plans, who claim that Amazon has been exploring the launch of a digital assets enterprise. It's thought that Amazon’s entry into the Web3 landscape may boost the NFT industry. Amazon isn't the only traditional institutional player entering the NFT marketplace ecosystem, Fidelity Investments has recently filed trademark applications for an NFT marketplace. New Amazon CEO Andy Jassy has previously worked with collectibles, for 5 years as a project manager for collectibles company, and has publicly stated that he saw NFTs in Amazon’s future. Amazon’s has so far kept quiet on the full extent of its Web3 ambitions. (Pymnts) Read More

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