Meta Digest

FTX struck with major debt to 50 creditors

Clara Emily Clara Emily on March 20, 2023

Image source: The Block

FTX, the well-known cryptocurrency, has been in trouble for the past few weeks.

FTX owes $3.1 billion to its top 50 creditors, according to documents filed Saturday in Delaware bankruptcy court.

The document clarifies the extent of potential losses suffered by clients.

The filing

According to Saturday’s filing, the crypto exchange’s top 10 creditors each have more than $100 million in unsecured claims.

The claims total more than $1.45 billion.

The filing explained that the debt does not include anything owed to company insiders.

However, this may change with additional information.

FTX owes its largest creditor more than $276 million.

The company now owes around $21 million to its 50th largest creditor.

Despite the enormous debt, the filing can only scratch the surface of what the company owes.

Last week, FTX said it could have over a million creditors.

The company owes its third-largest creditor $174 million.

Although unconfirmed, the figure matches what Genisis, a cryptocurrency lender, announced ten days ago: $175 million in funds locked in its FTX trading account.

Read also: FTX probed by Bahamas police in the weekend

Filing notice

A notice accompanying the filing explains that FTX based the totals on information that can be seen but was not accessible.

The notice says the company was unable to access customer data fully.

FTX, led by new chief executive John J. Ray III, said in the filing that its debt numbers might be inaccurate.

There may be payments to creditors that need to be reflected in the books or records of the company.

Creditors

A request was filed to withhold information about FTX’s creditors and their personal information.

In addition, the motion says disclosing creditors’ names could give predatory companies a lead.

It reads:

“Public dissemination of the Debtors’ customer list could give the competitors an unfair advantage to contact and poach those customers, and would interfere with the Debtors’ ability to sell their assets and maximize value for their estates at the appropriate time.”

“The Debtors historically did not keep appropriate books and records,” it continued.

“[And] the Debtors are currently working to access certain sources of data and records that are currently unavailable.”

Read also: Creator royalties to stay on several NFT marketplaces

Chapter 11 cases

The decision to create a list of FTX creditors came from overlapping creditors in its Chapter 11 cases, unorganized filing, and limited time and resources.

“Creditor information, and in particular customer information, is not clearly labeled or identifiable by [FTX],” the motion reads.

“As a result, presenting the information on a consolidated basis will ensure the most relevant and known information can be promptly disclosed.”

A date is ready for the “first day of hearing” in FTX’s bankruptcy proceedings.

As a result, it will take place in Wilmington, Delaware, on Tuesday.

Reference:

FTX says it owes over $3 billion to its 50 largest creditors

Elon Musk calls out report on SBF investment as ‘false’

Vina Grady Vina Grady on March 20, 2023

Image source: Wallpapers

Elon Musk recently dismissed reports that FTX founder Sam Bankman-Fried contributed around $100 million to his acquisition of Twitter.

The revelation from Twitter’s new owner came amid a Business Insider headline that claimed SBF had a $100 million stake in the popular social media platform.

Musk dismissed the claims, tweeting, “False.”

The story

The Business Insider story was an article write-up by Semafor, a recently launched news site.

It has been alleged that Elon Musk invited SBF to “roll” his Twitter shares into the company, which would become private under Musk’s ownership.

SBF previously reportedly purchased Twitter shares in anticipation of its acquisition.

Additionally, $43 million worth of Twitter stock was listed as one of FTX’s illiquid assets in a leaked sheet earlier this month.

SBF initially expressed a willingness to contribute more than $10 billion but did not invest any new money in the deal.

Instead, his pre-existing Twitter shares were initially injected into the company under Musk, according to unpublished text messages cited by Semafor.

Following Musk’s denials, Semafor updated the report to clarify that Sam Bankman-Fried did not invest in Twitter.

Twitter’s new owner also slammed the outlet, noting that SBF is a partisan – a fact the publication reveals in its coverage of the FTX crisis.

Read also: Andreessen Horowitz in support of Elon Musk

Musk and SBF

Twitter’s lawsuit against Elon Musk revealed private text messages, prompting him to complete his takeover bid.

According to reports, SBF and Musk were introduced in March by Oxford philosophy professor Will MacAskill.

MacAskill reportedly advised the creator of FTX on his principles of “effective altruism.”

At the time, SBF said he was happy to talk to Musk about Twitter or anything else.

He reiterated his offer in April when Musk announced his outright offer to buy Twitter.

SBF then sent Tesla’s CEO a Twitter thread outlining their vision for a decentralized Twitter.

SpaceX and Boring Company backer Michael Kives sent the same thread to Musk, saying it would be “cool to do this with Sam Bankman-Fried.”

Read also: Sam Bankman-Fried dismisses Argentina escape rumors

Musk tells all

Elon Musk recently revealed early interactions with the FTX founder set off alarm bells.

According to the owner of Twitter, SBF has triggered its “bs detector.”

Musk explained in a Twitter space, saying:

“I talked to him for about half an hour, and my b******* meter was red-lining. This dude is full of ****, that was my impression.”

Musk hinted at the time that he was looking for investors to contribute to the deal on Twitter.

“He does not have capital,” he added. “He will not come through, that was my prediction.”

Instead, FTX’s rival and eventual rescuer, Binance, invested $500 million in the acquisition of Musk.

Reference:

Elon Musk calls report that SBF invested $100M in Twitter ‘false’

Alameda payments handed SBF billions while others only got millions

Vina Grady Vina Grady on March 17, 2023

Alameda – On Wednesday, the infamous crypto exchange business FTX’s new management made an unexpected announcement concerning its founder’s compensation.

The company’s co-founder and ex-boss, Sam Bankman-Fried, reportedly got $2.2 billion in payments and loans from Alameda Research.

The sum is enormous and sticks out in comparison to other executives.

Caroline Ellison, the former CEO of Alameda Research, received only $6 million in compensation.

According to new management documents, a total of $3.2 billion was awarded to ex-FTX workers, the vast majority of whom came from the company’s sister trading firm.

Alameda

When FTX went bankrupt in late 2022, Alameda Research was right in the middle of it.

Sam Bankman-Fried founded the quantitative trading firm as well.

According to newly appointed FTX CEO John J. Ray III, who took over leadership after SBF left, Alameda has the right to use FTX customer assets for its own objectives without oversight.

FTX, on the other hand, was previously regarded as one of the pinnacles of the Web3 period.

It was a cryptocurrency exchange where customers could purchase, sell, and speculate on the future prices of various cryptocurrencies.

Before its demise, FTX had over 134 enterprises under its umbrella and was located in the Bahamas, which was more open to bitcoin.

SBF founded Alameda in 2019, however he claims he will step down as CEO in 2021, leaving day-to-day operations in the hands of others.

Authorities suspect that the sudden collapse of FTX was caused by management putting extraordinarily risky wagers with customer cash given by Alameda Research.

The payouts

According to papers released this week by FTX’s new management, SBF received the majority of the $3.2 billion in compensation.

While he received the most money, former FTX director of engineering Nishad Singh received $587 million.

Meanwhile, co-founder Gary Wang pocketed $246 million.

Ryan Salame, former FTX Digital Markets co-CEO, earned $87 million, while Sam Trabucco, former Alameda Research co-head, received $25 million.

According to the announcement, they did not include the significant sum of more than $240 million spent on purchasing luxury property in the Bahamas.

It should also be mentioned that Trabucco stepped down as CEO of Alameda in August.

Since then, he has not been seen or heard from.

Despite the fact that the rest of SBF’s inner circle has already been prosecuted, prosecutors have refused to charge Sam Trabucco.

Read also: Sam Bankman-Fried receives $250 million release bail, ordered to stay with family

Ellison

Upon Trabucco’s resignation, Caroline Ellison was named Alameda Research’s sole CEO in October 2021.

They were once co-CEOs of the platform.

Ellison and Sam Bankman-Fried had an on-again, off-again relationship.

While her involvement in the company’s failure was well known, her background gained even more interest, since her now-deleted Tumblr blog gave an uncommon perspective on what transpired in the Bahamas penthouse.

The penthouse housed ten people, including Ellison and SBF, who made important decisions there.

The group was classified as a “polycule,” or a network of persons in a polyamorous relationship, so decisions were not the only thing going on.

In November, Ellison’s blog, which was active from 2014 until 2022, presented content that coincided closely with her past.

Her site shows a strong interest in racial science and polyamory.

It also provided further insight into the author’s viewpoint on the crypto industry, as expressed in one post:

“I didn’t get into this as a crypto true believer. It’s mostly scams and memes when you get down to it.”

The charges and the company today

Sam Bankman-Fried is currently facing 12 felony accusations in the United States, some of which were handed down in a superseding indictment in February.

The charges allegedly include a conspiracy to defraud FTX clients through derivatives purchases and sales.

In January, SBF pleaded not guilty to the initial charges.

Since then, he has been awaiting his trial in October.

Meanwhile, Ellison, Wang, and Singh have confessed and are cooperating with police.

FTX client cash worth billions of dollars are now missing, with a major amount allegedly taken.

Image source: Salon.com

Ava Labs CEO finds silver lining in crypto industry shift after FTX

Clara Emily Clara Emily on March 13, 2023

Ava Labs – The crypto market crashed in 2022, and it became even more chaotic when the largest crypto exchange platform FTX went bankrupt.

The fall caused a domino effect, putting financial hardship on other crypto firms who were exposed to FTX.

It also resulted in some firms declaring bankruptcy, closing down, or freezing assets.

Emin Gün Sirer, the founder and CEO of Ava Labs, accused Sam Bankman-Fried, the creator of FTX, of causing massive damage.

The news

The FTX collapse last autumn stung an already battered sector even more.

The collapse of the once-mighty crypto exchange harmed its reputation, particularly the industry’s legitimacy and confidence.

“The damage that Sam [Bankman-Fried] did is immeasurable,” said Sirer.

“All that goodwill that we built over many, many years of hard work is just usurped by some guy who comes in and puts on this boy genius act.”

The CEO of Ava Labs stated that he has witnessed the digital assets business evolve from nothing to what it is now.

He also mentioned that he worked hard as a computer science professor at Cornell University to bring additional knowledge and understanding into blockchain technology.

Sirer has also organized workshops and provided information about cryptocurrencies to legislators.

Emin Gün Sirer recounted how the prospect of Sam Bankman-Fried’s effect on the crypto realm kept him awake at night.

The CEO of Ava Labs stated that he was aware of shifting regulatory tides, warning that it may be risky for persons and organizations working in cryptocurrency.

SBF

The crypto market imploded in the summer of 2022, and digital asset values plummeted.

Sam Bankman-Fried, the now-famous FTX founder, rose to prominence during this period.

His profile soared, drawing comparisons to John Pierpont Morgan for the 30-year-old entrepreneur.

The crypto crisis was akin to the 1907 economic panic, and Morgan was important, if not godlike, in determining which enterprises would survive and whose would perish.

SBF’s reputation had been unrivaled for months, until everything changed in November.

Downward spiral

When FTX fell apart, Sam Bankman-reputation Fried’s as the crypto’s golden boy began to erode.

Following a run on the exchange triggered by a sharp decline in the FTT token, FTX’s native token, the firm declared bankruptcy.

According to the bankruptcy complaint, the crypto exchange did not maintain one-to-one reserves of customer assets.

As a result, FTX was unable to accept withdrawals.

Read also: Blur continues momentum with incentive program

Arrest

Sam Bankman-Fried was detained in December 2022.

He was eventually accused with a slew of offenses ranging from fraud to money laundering.

SBF is accused of stealing billions of dollars in client monies.

Sam Bankman-Fried pled not guilty despite growing evidence.

Later, the FTX founder would face further allegations, including illicit political donations.

Donations totaled tens of millions of dollars.

Scrutiny

Former partners compared SBF to Bernie Madoff as a result of his shenanigans.

Skybridge’s managing partner, Anthony Scaramucci, regarded SBF as a friend before his betrayal.

“I thought Sam was the Mark Zuckerberg of crypt,” said Scaramucci. “I did not think he was the Bernie Madoff of crypto. I got it wrong.”

Nevertheless, Ava Labs CEO claimed Sam Bankman-Fried’s lack of scrutiny was due to the image he worked hard to maintain.

Sirer discussed how he groomed his unkempt hair and spent so much money on marketing to change the world’s perception of him as a genius.

Aftermath

The aftermath of the FTX collapse, according to Emin Gün Sirer, would rely on establishing a positive discussion with regulators.

The CEO of Ava Labs emphasized the failure of numerous cryptocurrency startups and projects trapped in the company’s web of deception.

Additionally, Sirer stated that it is critical to stress that FTX’s fate was caused by a centralized body, not crypto itself.

Silver linings

After the conundrum FTX set up, Emin Gün Sirer is now looking for a silver lining.

Although he is aware of the harm and the subsequent spread to other firms, the Ava Labs CEO feels the damage would have been greater if it had gone unchecked.

“If we had given Sam a couple more years of runaway, it would have been worse,” said Sirer.

He also realized how SBF’s antics drew attention to crypto.

“I no longer have to educate people on what Bitcoin [or] Ethereum is.”

Emin Gün Sirer also expressed happiness that Ava Labs was never a “Sam coin.”

“We were never a Sam coin, and therefore we stayed out of that whole craziness,” said the Ava Labs CEO.

“And we’re just thanking our lucky stars for it.”

Image source: Coincu News

FTX Japan allows withdrawals again

Hector Andrews Hector Andrews on March 13, 2023

FTX Japan – Despite the fact that FTX, a significant crypto exchange site, has been inactive for months, there has been movement in releasing the frozen monies.

Customers of FTX Japan may now withdraw their crypto deposits and fiat money, according to an announcement made on Monday by the company’s Japanese affiliate.

The withdrawal procedure will take place via the Liquid Japan cryptocurrency trading platform, which FTX purchased in the spring of 2022.

The news

Although withdrawals were suspended in November 2022 when Sam Bankman-Fried’s crypto empire failed and filed for bankruptcy, the latest news gives FTX Japan clients some cause for optimism.

The Tokyo-based business claims that customers who qualify can withdraw their money.

By email, they were informed of the procedure.

Customers must open a Liquid Japan account and validate the balance on their FTX Japan account in order to withdraw money.

The announcement

In a blog post, FTX Japan expressed regret to its clients and provided them with information on how to withdraw their money.

“We are very sorry for the concern and inconvenience caused to our customers due to the suspension of our service,” the blog post said.

“In order to proceed with withdrawals, customers who have assets in their FTX Japan account would need to confirm the balance of their assets and transfer them to their Liquid Japan account.”

“Customers who do not have a Liquid Japan account are required to open one before they can transfer assets.”

“We have sent an email to all eligible customers regarding the details of the procedures.”

“If you have not completed the procedure, please follow the instructions in the email and complete the process.”

“Please note that due to the large number of requests from customers, it may take some time for the withdrawal process to be completed.”

“We will announce the resumption of other FTX Japan services as soon as possible.”

Read also: Chainspace creates NFT portals connecting Bitcoin and Ethereum

Japanese subsidiary

FTX Japan was one of the more recent branches when compared to other subsidiaries.

It began operations in June 2022 and lasted less than six months until the cryptocurrency exchange went down.

“Japan is a highly regulated market with a potential market size of almost $1 trillion  when it comes to cryptocurrency trading,” Sam Bankman-Fried said in June 2022.

SBF was chosen as the interim CEO when FTX Japan first went live.

Customers who utilized other FTX subsidiaries like FTX.US aren’t as fortunate as those who used FTX Japan, where the most recent advancement will allow customers to breathe.

While the international exchange is going through bankruptcy procedures in a Delaware court, other subsidiaries are still suspended.

The fall of an empire

The top cryptocurrency exchange in the market, if not the top one, was FTX.

However, the exchange’s bankruptcy filing in November 2022 shook the cryptocurrency community.

The exchange’s native cryptocurrency, FTT, had a sharp decline in price, which prompted the bankruptcy filing.

When assets began to leave FTX, it became clear that FTX was unable to maintain one-to-one reserves of client assets.

As a result, the exchange was unable to process withdrawals, which forced firm executives to declare bankruptcy.

As soon as Sam Bankman-Fried was taken into custody and accused with financial offenses like:

  • Wire fraud
  • Conspiracy to commit money laundering

Notwithstanding the weight of the evidence against him, SBF has entered a not guilty plea.

FTX progress

FTX submitted a motion in December 2022 seeking authorization for the sale of the four financially sound subsidiaries of the business, namely:

  • Embed Technologies
  • FTX Europe
  • FTX Japan
  • LedgerX

The goal of the initiative was to assist the corporation in raising capital and pay off creditors who are owed billions of dollars.

Recently, the Southern District of New York court presiding over SBF’s criminal case considered an addendum to his bail arrangement that forbade him from using devices.

He made the choice as a result of using the Signal app to communicate encrypted messages across a virtual private network.

The group in charge of FTX’s bankruptcy proceedings issued a warning last Friday about scam tokens posing as FTX customers’ debt.

“The FTX Debtors have not issued any debt token,” tweeted FTX. “Any such offers are unauthorized.”

Image source: VOI

Sam Bankman-Fried dismisses Argentina escape rumors

Clara Emily Clara Emily on March 13, 2023

Image source: Crypto Rus

Sam Bankman-Fried, founder and CEO of cryptocurrency exchange FTX, has faced a series of trials in recent weeks.

On November 11, Bankman-Fried stepped down as CEO following the opening of Chapter 11 bankruptcy proceedings in the District of Delaware.

Rumors have since circulated that he fled following the collapse of FTX.

Rumors

Recently, Crypto Twitter has been talking about a rumor that SBF (Sam Bankman-Fried) has fled to Argentina.

He was rumored to have escaped when his cryptocurrency exchange collapsed.

However, a text message to Reuters on Saturday revealed that Bankman-Fried was still in the Bahamas.

The outlet asked if the rumors were true, but he replied: “Nope.”

Read also: FTX probed by Bahamas police in the weekend

Tracking the rumors

Over the weekend, Twitter users speculated that Sam Bankman-Fried was on the run.

SBF has filed for Chapter 11 bankruptcy for FTX Group, which includes companies such as FTX Trading, FTX US and Alameda Research.

The rumor started when users tracked the coordinates of his private jet using ADS-B Exchange, a flight-tracking website.

The website suggested that Bankman-Fried’s Gulfstream G450 landed in Buenos Aires on early November 12 on a direct flight from Nassau, Bahamas.

Sam Bankman-Fried lives in a penthouse in Nassau with ten roommates, including Caroline Ellison, CEO of Alameda Research.

Read also: Sam Bankman-Fried takes massive financial blow

SBF

Sam Bankman-Fried was once considered the leading figure in the exponential growth of cryptocurrencies.

However, he is now at the center of the most high-profile scandal in the industry.

In less than a week, FTX fell from grace as the largest $32 billion cryptocurrency exchange to a bankrupt company with an $8 billion hole in its balance sheets.

According to Bloomberg, Bankman-Fried’s net worth fell from $16 billion to zero following the FTX crash.

Over the past few years, FTX has raised billions in venture capital from lenders such as:

  • Lightspeed Venture Partners
  • Ontario Teachers’ Pension Plan
  • Circle Internet Financial
  • Coinbase Ventures
  • Multicoin Capital
  • Paul Tudor Jones
  • Sequoia Capital

Reference:

Sam Bankman-Fried denies rumors that he fled to Argentina

Crypto ads not as prominent in 2023 Super Bowl

Hector Andrews Hector Andrews on February 7, 2023

Crypto ad – When numerous cryptocurrency firms ran advertisements before the NFL’s championship game in 2022, it became customary.

The Super Bowl LVII is shaping up to be an exciting opportunity for the digital asset sector.

2022

A number of crypto ads from some of the biggest companies were seen during the Los Angeles Rams vs. Cincinnati Bengals game from the previous season on the popular televised game, including:

  • Coinbase
  • Crypto.com
  • FTX (before its collapse)

With an advertisement portraying a trader taking off into the skies after joining up for the site, Etero joined the frenzy and established itself as a top venue for trading stocks and cryptocurrencies.

Meanwhile, a Budweiser ad that appeared to be promoting cryptocurrency also was.

By depicting the project’s famous glasses over a classical painting portrait, it paid tribute to the Nouns DAO NFT collection.

While this was going on, other businesses burned through millions of dollars on the crypto ads in an effort to build a name for themselves.

Over 112 million people watched the game last year, according to the NFL.

Giveaways

FTX and Coinbase were two of the businesses that ran crypto ads and gave away Bitcoin.

The Curb Your Enthusiasm actor Larry David was the subject of the FTX commercial, which ended with the comic being disdainful of the project’s app.

Layoffs

FTX did not reduce employees prior to their demise, but Coinbase and Crypto.com did so once the Terra ecosystem collapsed in the summer of 2022.

In the end, layoffs became a pattern in the cryptocurrency sector, lasting into this year.

The CEO of cryptocurrency exchange Binance, Changpeng Zhao, stated specifically that he will forgo crypto ads for the Super Bowl.

In June, he said, Binance is still hiring.

Read also: Crypto exchanges accounted for a chunk of 2022 layoffs

“It was not easy saying no to Super bowl [SIC] ads, stadium naming rights, large sponsor deals a few months ago, but we did,” Zhao tweeted.

“Today, we are hiring for 2000 open positions.”

A smaller showing

Since Bitcoin sold for almost $42,000 during the previous Super Bowl, the price of cryptocurrencies has significantly decreased.

Despite the shifting market, a number of businesses will support cryptocurrencies on Sunday when the Philadelphia Eagles play the Kansas City Chiefs.

The first commercial break of the game will include a crypto ad from Limit Break, a Web3 startup.

The business intends to distribute thousands of its Dragon series NFTs as part of a promotion for its free-to-own NFT gaming concept.

One of the most distinctive ads will be the one on cryptocurrency.

It is an interactive commercial that uses a QR code to expose the DigiDaigaku universe to the audience.

Limit Break’s crypto ad will follow in Coibase’s footsteps by using a bouncing QR code, similar to the classic bouncing DVD logos, to guide viewers to its website in a 2022 advertisement.

The website failed as a result of all the traffic, thus last year’s advertisement was a bit of a miss.

Other ads

Bitbuy, a cryptocurrency exchange, is one of the recurring Super Bowl ad ventures.

With a few modifications, Bitbuy will run a crypto ad in Canada for the second time.

The firm is adjusting its strategy this time around because lost chances were its main emphasis the previous year.

Bitbuy will center their 2023 crypto ad around the idea of trust.

The forthcoming commercial will be twice as long, clocking in at a full minute.

In place of Kyle Lowry, the most recent Rookie of the Year in the NBA, Scottie Barnes will appear in the Bitbuy advertisement.

Turbotax first mentioned cryptocurrencies in its ad in 2022, and it will do it once again this year.

For the upcoming ad, Jason Sudeikis will make a brief appearance.

Representation

The 2019 Super Bowl won’t have any representation for cryptocurrency firms, according to Mark Evans, vice president of ad sales at Fox Sports.

Despite being focused on blockchain technology, a Limit Break spokesperson claimed that the company’s marketing fell under the gaming category.

Image source: Blockworks

Crypto exchanges accounted for a chunk of 2022 layoffs

Clara Emily Clara Emily on February 6, 2023

Crypto exchanges – The entire globe watched as major tech companies like Amazon and Meta laid off hundreds of thousands of staff.

2023 saw the movement persist and spread to the cryptocurrency industry.

A CoinGecko report states that a surge of layoffs in the cryptocurrency industry made January 2023 the second-worst month for layoffs.

More than 2,806 people lost their employment as a result.

The layoffs

The total number of layoffs in the cryptocurrency sector last month may have set the year on track to top 2022’s total of about 7,000.

The data indicates that layoffs are taking place as businesses are under increasing pressure from the bear market and difficult global financial conditions.

Centralized cryptocurrency exchanges, which accounted for 84% of all layoffs in January’s data, made up the majority of the reductions.

Lower trading volumes and falling revenues were noted by the academics as important contributing causes to the layoffs.

Exchanges

The following are some of the prominent cryptocurrency exchanges that reported widespread layoffs in January:

  • Blockchain.com
  • Coinbase
  • Crypto.com
  • Huobi
  • Luno

Several businesses, like Coinbase and Crypto.com, started removing more people in 2022 (June, to be specific).

Read also: Mastercard NFT product lead resigns

The COO and co-founder of CoinGecko, Bob Ong, offered his two cents and said:

“During the bull market run, crypto exchanges expanded aggressively in response to the rapid growth in retail investor demand.”

“While crypto companies, in general, have been hit hard by the onset of crypto winter amid a tough macroeconomic environment, layoffs have revealed that exchanges, in particular, have been ‘swimming naked’ and can no longer sustain their previous excesses.”

Recovery

The crypto market somewhat made up some of the losses it suffered in 2022 in January.

Bitcoin, however, had a value increase of over 40% last month.

“It remains to be seen whether crypto exchanges will need to take any further cost-cutting measures,” said Ong.

However, with 3,003 jobs lost, June 2022 continues to hold the record for the most layoffs at cryptocurrency exchanges.

As a result of the Terra ecosystem’s collapse, it was the first significant catastrophe.

Terra

The collapse of Terra’s UST stablecoin and the governance token LUNA in the middle of the year caused the crypto market to experience its most difficult period.

When it dropped from 100% to a fraction of a cent, LUNA was in the top ten.

The processes behind Terra and its stablecoin as well as widespread fear are to blame for the collapse.

When they heard that the stablecoin was declining, several investors looked for a way out.

The 20% rate was first noted as constant, but it began to decline in March after Proposal 20.

According to proposal 20, the interest rate would climb by 5% if Anchor’s reserves did.

However, the interest rate would also reduce if they fell by 5%.

Further collapse

When cryptocurrency exchange site FTX crashed in November, the pressure on the cryptocurrency market increased.

As a result of the collapse, other cryptocurrency exchanges were also impacted, and 1,805 people lost their employment.

Companies exposed to FTX were also heavily impacted, including:

  • Genesis Trading
  • Galaxy Digital
  • Voyager Digital

Millions of dollars that were stored with the crypto exchange were lost by several of the companies.

Investors’ access to their money was also blocked.

The CoinGecko research states that centralized cryptocurrency exchanges were responsible for 82.2% of 2022’s November layoffs.

Crypto still matches a larger amount of job losses in the tech industry, accounting for 4.3% of total tech layoffs last year.

The percentage of total tech layoffs was significantly lower in January, at 4%.

The following industries suffered the most from widespread layoffs:

  • Consumer technology
  • Food tech
  • Transportation

Image source: Wired

SBF barred from contacting potential witnesses

Clara Emily Clara Emily on January 30, 2023

Image source: The New York Times

SBF: According to sources, federal prosecutors requested that Sam Bankman-Fried’s bond arrangement be modified by US District Judge Lewis Kaplan.

They claim that the former CEO of the defunct cryptocurrency exchange platform may have engaged in “witness tampering” by sending possible witnesses encrypted texts.

The news

Prosecutors said in a four-page filing on Friday that SBF tried to utilize the encrypted messaging service Signal to get in touch with the current “General Counsel of FTX US.”

On January 15, he reportedly sent them an email as well.

The filing referred to Ryan Miller, FTX US’s current counsel, as “Witness-1.”

“I would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other,” SBF allegedly wrote, according to US prosecutors.

Additionally, they said Bankman-Fried made an effort to contact additional present and former FTX workers.

SBF was allegedly trying to “vet things” with Miller in an effort to influence Miller’s testimony, according to the prosecutors.

Prevention

In a recent filing, it was requested that SBF refrain from getting in touch with any additional current or former FTX personnel or Alameda Research.

The sole exception is that he can only participate if a lawyer is present and he has authorization from the relevant authorities.

Prosecutors pointed out that the circumstance is not an unusual pre-trial limitation.

Additionally, the brief asked Judge Kaplan to ban SBF from utilizing Signal and other comparable encrypted texting apps.

Prosecutors assert that the prohibition on SBF using encrypted communications channels guards against the obstruction of justice.

Caroline Elison, the CEO of Alameda, admitted to committing financial crimes.

She is now helping with the FTX collapse inquiry.

SBF was aware of the effects of the automated message deletion on platforms like Signal and Slack, Elison said to the prosecution.

“Many legal cases turn on documentation, and it is more difficult to build a legal case if information is not written down or preserved,” said the former FTX CEO to Elison, according to prosecutors.

Read also: NFT trade are looking good for early 2023

Other prohibitions

It is not the first time that a file has been required to alter SBF’s bond arrangement.

Prior to this month’s arraignment, his request for access to monies connected to FTX or Alameda was turned down.

He entered a not guilty plea to a number of financial offenses at the hearing.

The attorneys for Sam Bankman-Fried reacted with a letter that was delivered on Saturday.

The letter argued against the prosecution’s demand and provided its own unique set of recommended limitations on SBF’s communications.

The legal team’s response

“The Government’s proposal that Mr. Bankman-Fried be barred from any contact with former or current FTX employees without counsel present is simply unworkable,” the letter read.

“For example, it would mean that Mr. Bankman-Fried could not speak to his therapist, who is a former FTX employee, without the participation of his lawyers.”

Additionally, the suggested limitations from the prosecutors were deemed “overbroad” by SBF’s legal staff.

However, they proposed prohibiting their client from contacting current and former FTX and Alameda employees entirely.

Elison, Zixiao “Gary” Wang, and Nishad Singh are just a few names on the list.

The evidence presented by federal prosecutors does not support the proposed limits, according to SBF’s attorneys.

They reasoned that the attempt to get in touch with Miller by their defendant was an attempt to give support throughout the company’s bankruptcy process.

The attorneys said that it doesn’t suggest malfeasance.

Furthermore, the auto-delete feature wasn’t turned on in SBF’s communications to Miller.

They said that the fact that they were sent by email demonstrated that he wasn’t attempting to hide his activities.

“In fact, Mr. Bankman-Fried has turned off the disappearing messages function on his Signal account and is not sending any Signal or Slack messages with auto-delete features,” said the lawyers.

The provision of SBF’s bail prohibiting him from moving funds linked to FTX or Alameda should be lifted, according to his legal counsel.

Nearly three weeks later, they described the grounds as stating “that condition has not been supported.”

Later on Saturday, a court order outlining the correct procedures for each legal team to reply to the letters was filed, and Judge Kaplan provided specific instructions.

Additionally, he directed federal prosecutors to provide comprehensive copies of the correspondence between Miller and SBF.

Elizabeth Warren urges more support for SEC

Josh Barter Josh Barter on January 26, 2023

Image source: Coincu News

Elizabeth Warren: The US Securities and Exchange Commission and the cryptocurrency business have never gotten along.

Elizabeth Warren, a senator from Massachusetts, is poised to scrutinize it further.

The news

Elizabeth Warren issued a warning to the cryptocurrency industry and encouraged the US SEC to take stronger action against cryptocurrency fraud.

In prepared remarks for the American Economic Liberties Project, Warren claimed that the sector would be afraid of a more powerful SEC.

“The SEC has brought enforcement actions against celebrity crypto promoters for not disclosing their compensation to the public,” said Warren.

“It has gone after the employees at exchanges like Coinbase for insider trading. It has charged crypto crooks for defrauding ordinary investors out of millions of dollars.”

The senator hinted that the agency is just getting started despite its activities.

The agency and allies

Other US government entities, outside the SEC, have dabbled in cryptocurrencies, including:

  • The Commodity Futures Trading Commission (CFTC)
  • The Federal Trade Commission (FTC)
  • The Federal Deposit Insurance Corporation (FDIC)
  • The Department of Justice (DOJ)

Elizabeth Warren thinks the SEC and chairman Gary Gensler are the ideal candidates for the job, despite the fact that companies in the cryptocurrency business would prefer to cooperate with the CFTC.

The agency’s decision to prevent Bitcoin exchange-traded funds from coming live on the market was praised by Warren as well.

“The commission has been loud and clear that crypto doesn’t get a pass for long-standing security laws that protect investors and ensure the integrity of our financial markets,” the senator said.

“This is the right approach – the SEC has the right rules, and the right experience, and Gary Gensler is demonstrating that he is the right leader to get the job done.”

Doubts

Elizabeth Warren has applauded Gensler’s development, while some others, including Warren’s coworkers, have concerns about his capacity to carry out his responsibilities.

Gary Gensler received criticism for being too lenient with FTX and Sam Bankman-Fried.

Others accused him of choosing particular crypto players to target for prosecution, a practice known as regulation by enforcement.

Gensler has furthermore come under fire for driving cryptocurrency companies out of business.

A necessity

Elizabeth Warren emphasized the need for the Congress to assist the agency more and said that both power and funding were required.

The combination of the two elements would guarantee that it has the necessary tools to engage the crypto business at full force.

“The SEC needs to do even more and use the full force of its regulatory powers across the entirety of the crypto market,” she explained.

Warren continued by implying that the SEC and other regulatory bodies were forced to act when a number of cryptocurrency players collapsed in 2022.

The companies include:

  • Celsius
  • FTX
  • Three Arrow Capital
  • Voyager Digital

Read also: DOJ shuts down platform for criminal affairs

Environmental aspect

Elizabeth Warren also asked environmental organizations to concentrate more on cryptocurrency miners.

She described how mining increased energy costs and harmed the environment.

Since cryptocurrencies have grown so popular, regulators frequently raise the environmental impact of cryptocurrency mining.

A cryptocurrency prohibition has previously been demanded by many due to its harmful effects on the environment.

Presidential intervention

Elizabeth Warren also attributes the booming cryptocurrency market to the previous government of President Donald Trump.

She accused its officials of hastily approving the cryptocurrency market.

According to Warren, the market is crowded with the following:

  • Junk tokens and unregistered securities
  • Rug poles
  • Ponzi schemes
  • Pumps and dumps
  • Money laundering
  • Sanctions eviction

“The consequences of Trump’s regulator’s weaknesses were no surprise – by 2017, nearly 80% of all initial coin offerings are scams,” she said.

“The following year, investors lost about $9 million each day to crypto scams.”

Banks

Elizabeth Warren applauded the SEC’s efforts against businesses that provided dangerous, unregulated crypto loan products.

She drew attention to the recently insolvent BlockFi.

Warren criticized Silvergate and other financial institutions for increasing the risk of a crypto collapse, which would impoverish American taxpayers.

“It’s the bank regulators’ job to insulate the banking system and taxpayers from the risk of crypto fraud,” said the senator.

“They have the tools, and they need to use them.”

Warren criticized self-custody wallets last month.

She and Senator Roger Marshall co-signed the Digital Asset Anti-Money Laundering Act in response.

The law requires blockchain infrastructure suppliers and users in the United States to identify their customers.

Decentralized networks, miners, and validators developers are all subject to the requirements.