FTX is still affecting the industry
FTX crypto lesson 101: don’t use fiat to steal from customers and buy yachts with their money
FTX debtors have disclosed financial statements showing what its executives bought themselves shortly before the exchange’s collapse in November 2022. This included several tens of millions of dollars in cash payments and transfers. It also included the purchase of a $2.5 million yacht for the Alameda Research co-CEO. The new management is the first to admit they’ve only got the details for fiat transfers and those crypto transactions they’ve been able to trace.
Note to industry: if you’re going to buy yourself yachts and transfer yourself tens of millions of dollars from customer funds, don’t do it in fiat or traceable crypto.
Robinhood buys its shares back from SBF ownership
Before his arrest, FTX founder Sam Bankman-Fried owned 55 million Robinhood shares, now worth $605 million. Robinhood has now bought those back from the United States Marshal Service. When the DoJ seized the same shares following SBF’s arrest in January, they were worth about $450 million. To complicate the matter, SBF co-founded and owned another firm, Emergent Fidelity Technologies. This entity had initially purchased the shares from him, but it filed for bankruptcy soon after FTX went out of business after a fight over who should get the shares following FTX’s collapse. These shares make up the majority of the $700 million in assets seized from SBF after his arrest. In January, he tried to argue he needed the shares to fund his legal defence, but common sense seemingly prevailed long enough to deny this request. Robinhood has done well out of this. Its shares closed 2% higher after this.
Robinhood is now the third biggest holder of Bitcoin, owns over $3.2 billion in a single wallet
Following this purchase, Robinhood is now reportedly the third largest holder of Bitcoin stored on a single wallet. According to the report by Arkham Intelligence, the largest holders of Bitcoin stored on single wallets are Binance ($6.4 billion) and Bitfinex ($4.3 billion). Seeing as neither exchange is, according to various reports, without controversy, this could be interesting (read, disruptive) for the industry. According to Arkham Intelligence, Robinhood also reportedly has the fifth-largest ETH wallet containing about $2.54 billon worth of ETH.
It isn’t the best time for centralised crypto exchanges, or stablecoins
Hints of US Government criminal probe into Binance
The US DOJ (Department of Justice) has reportedly been investigating Binance for allegations of money laundering and potential violations of sanctions involving Russian entities. The legal team representing the US SEC in its civil case against the exchange has now asked the court to allow documents filed under seal. This request could hint at an ongoing criminal probe by the DOJ, according to former SEC official John Reed Stark.
According to Stark, “The secret U.S. SEC filing likely relates to an existing U.S. DOJ investigation of Binance and could, directly or indirectly, describe the heretofore unknown contents of an impending U.S. DOJ Binance-related indictment or an indictment already filed under seal — which the U.S. DOJ would prefer to keep secret,” adding “Binance will likely NOT oppose the U.S. SEC sealing motion for fear of making public potentially inculpatory evidence or potentially scathing criminal allegations relating to Binance’s activities.”
He isn’t holding back. “Under any circumstance, that this SEC seal-seeking filing is unusual, odd and uncommon cannot be overstated”.
“In my almost 20 years in the SEC Enforcement Division, including 11 years as Chief of the SEC’s Office of Internet Enforcement, our team worked on and led a broad range of SEC investigations which involved parallel U.S. DOJ investigations and lots of litigation – and I can’t recall ever seeking to file a motion or any other court document under seal.”
The SEC filed a lawsuit against Binance, its US entity Binance.US, and its founder and CEO CZ in June for allegedly offering unregistered securities to U.S. users and failing to register as an exchange or a broker-dealer clearing agency. Industry insiders don’t seem to think this spells good news for Binance…
The number of bitcoins on centralised exchanges is falling
The number of Bitcoins held on centralised exchanges has dwindled to its lowest level since January 2018. The exchange reserve dropped 4% this month alone to 2 million bitcoins ($54.5 billion). Partly, this is due to the rise of custodian services, which mean that users don’t have to use centralised exchanges to trade. Most likely, this is due to rising distrust of centralised platforms after the collapse of FTX and others.
Stablecoin market caps are dropping
Tether, crypto’s main stablecoin has seen its market cap fall for the first time in 9 months. It fell 1.2% to $82.9 billion. Not everyone is convinced that Tether is backed by $82.9 billion. It is claimed the entire stablecoin market cap has dropped for 17 consecutive months. Maybe users are starting to want proof of reserves. Or, this could be due to industry woes causing lower trading volumes.
Tether has issued a new reserves report
Tether has released a new reserves report. This is an upgrade from its former pie charts. The new report claims to have a surplus in shareholder capital cushion of $3.29 billion spread over 15 blockchain ecosystems. Tether currently has total liabilities of $82.8 billion – that’s its Tether tokens in circulation. It claims to have $86.1 billion in assets. In October 2021, the U.S. CFTC fined Tether $41 million for sharing “untrue” statements about its reserve holdings. Some people have questioned how much backing Tether currently has. It is of course possible that everything is now wonderful. We’ll see.
In good news
London Stock Exchange Group reportedly planning blockchain trading platform
The London Stock Exchange Group is reportedly planning to create a blockchain-based platform for traditional financial assets, and has reportedly been working on this for a year. LSE Group’s head of capital markets Murray Roos says:
using blockchain is “slicker, smoother, cheaper and more transparent” for traditional assets.
They aim for the trading platform to enhance the efficiency of holding, buying and selling traditional assets. If it works, this project would make the LSE Group the first major global stock exchange to offer an end-to-end blockchain-powered ecosystem to investors. They emphasise that they’re not doing anything around crypto.
In crime news
North Korean hackers the Lazarus Group are reportedly planning to dump $41 million of Bitcoin: FBI
North-Korean state sponsored hacking group, the Lazarus Group, is preparing to dump 1580 bitcoins, now worth $41 million, that it stole last year, according to a new FBI report. Crypto platforms are going to want to be careful to make sure they’re not accused of laundering North Korean stolen funds…
Malicious actors take almost $1 billion in crypto so far this year
Malicious actors targeting the crypto space took $45 million in digital assets from their victims in August, of which $26 million was lost to exit scams. So far this year, a total of $997 million has been stolen by exploits, hacks, and scams, according to a report shared by the blockchain security firm CertiK. Most of this comes from two main exploits. In July this year, around $486 million was lost by Web3 data outlet De.Fi, and $231 million was lost to the Multichain exploit. (Cointelegraph) Read More
A reminder that private keys have to be private, at all times
Brazilian crypto streamer loses life savings by showing private keys
A Brazilian crypto streamer has reportedly lost around $50,000 in crypto by unwittingly exposing his private key to a self- custodial cryptocurrency wallet in the middle of a live stream. “I accidentally showed my private key live and the person had really quickly sent it to another address. I tried to close the broadcast and send crypto to another address but I was too late,” he said in an emotional video following the incident, claiming he lost his entire life savings. Poor guy.
Crypto mining company wants to burn tyres to fuel its plant
Burning tyres is notoriously bad for the environment and notoriously stupid. Burning tyres also releases a chemical called “furans” linked to causing cancer. And yet a Pennsylvanian crypto mining firm has genuinely released its intention to do just this to fuel its Bitcoin mining plant. Stronghold Digital Mining has been insensitive and environmentally unaware enough to ask the Environmental Protection Agency for permission to burn tyres to generate energy for its proof-of-concept Bitcoin mining plant. Because common sense doesn’t prevail, burning tyres is legal.