FTX stake in US bank raises concerns about banking loopholes, links to Tether’s bank
One of the revelations of the bankruptcy of FTX crypto exchange has been its investment in a small bank in rural America. Farmington State Bank in Washington State, now renamed Moonstone, is the 26th smallest bank in the U.S. It has one single branch and three employees. FTX invested $11.5 million in the parent company of the bank, FBH, via its sister company Alameda in March 2022. This investment was reportedly more than double the bank’s value at the time of $5.7 million. Many have suggested that FTX’s controlling ownership in Moonstone ‘is seen as a move to bypass the requirements of owning a banking license in the U.S., which according to many, is quite a complex task’. Questions are now being raised over how FTX got federal approval to buy its stake in Farmington. Banking veterans reportedly said that it was hard to believe regulators would have knowingly allowed the crypto firm to do so. What is also interesting here is that the chairman of the bank’s parent company FBH, Jean Chalopin, also happens to be the chairman of Deltec Bank, which has both Tether and Alameda on its client’s list. Many would consider this to be another red flag for Tether which has attracted its own share of controversy and has long been under scrutiny for reserve audits. Read More:
- Crypto Firm FTX’s Ownership of a U.S. Bank Raises Questions
- FTX owned an $11.5 million stake in a tiny rural bank in Washington state with just 3 employees, bankruptcy hearing shows
Crypto lender BlockFi latest casualty, goes bankrupt in aftermath of FTX meltdown
Crypto lending platform BlockFi has filed for bankruptcy, the latest crypto firm to collapse since FTX. BlockFi said it will use the Chapter 11 process to “focus on recovering all obligations owed to BlockFi by its counterparties, including FTX and associated corporate entities” adding that recoveries are likely to be delayed by the FTX bankruptcy. The chapter 11 bankruptcy will allow BlockFi to continue operating while working out a plan to repay creditors. BlockFi’s assets and liabilities are listed at between $1 billion and $10 billion each. The lender said that it had around $257 million of cash and is starting an “internal plan to considerably reduce expenses, including labor costs.” FTX US is listed as one of its top unsecured creditors, with a $275 million loan, following a July capital injection. BlockFi’s largest unsecured creditor, Ankura Trust Co., is owed about $729 million. Read More: Crypto lender BlockFi goes bankrupt in aftermath of FTX meltdown
SEC chair’s crypto oversight strategy in question as ecosystems collapse
A commissioner in the USA has called the effectiveness of crypto regulations in the United States in question owing to the colossal fall of major exchanges and ecosystems over the past year — Celsius, Voyager, and Terra (LUNA) and now FTX. Congressman Tom Emmer has expressed concerns about the oversight strategy implemented by Gary Gensler, the chair of the U.S. Securities and Exchange Commission (SEC) for the crypto ecosystem.
We were concerned in March that @GaryGensler was taking an indiscriminate and inconsistent approach to oversight of the crypto community. https://t.co/7MLPETnLxF
— Tom Emmer (@RepTomEmmer) November 25, 2022
FTX Under ‘Active’ Investigation by the Bahamas
The chief prosecutor of the Bahamas, Ray Pinder, has said that FTX is under under “active investigation”. Of the case, he said “We understand the enormous interest in this story but as a government, we decided right away that what was most important was not to engage with speculation or gossip, but instead to proceed methodically and deliberately in accordance with the exercise of due process and the rule of law”.
FTX Collapse leaves trail of unemployment in the Bahamas
The Bahamas, which was also hard hit by hurricane Dorian in 2019 and then the pandemic was already struggling to find ways to strengthen its economy. It appeared that the nation’s prime minister, Philip Davis, and his government believed crypto could play a critical role in the island’s economic recovery. Now, the community suggests that FTX’s sudden implosion has left a trail of unemployment on the island. FTX had reportedly provided employment for numerous locals. Many high-spending FTX employees who boosted the local economy have reportedly fled the island since the exchange’s collapse, reportedly leaving Bahamian security guards to now guard “nearly vacant buildings.” Read More: Crypto Firm FTX Landed in the Bahamas With a Bang, and Now the Bahamas Is Picking Up the Pieces
Crypto has survived worse than the fall of FTX: Chainalysis
Blockchain analysis firm Chainalysis has concluded that the fall of FTX affects a relatively smaller part of the crypto industry than Mt. Gox did at the time of its collapse, and believes that the industry should bounce back stronger. Chainalysis research lead Eric Jardine shared a Twitter thread looking at the market share of the two firms, finding that Mt. Gox averaged 46% of all exchange inflows in the year leading up to its collapse in 2014, compared to FTX’s average of 13% between 2019 to 2022.
1/ Big picture: FTX’s collapse has shaken the #crypto market. But this is not the first time crypto has faced significant turmoil related to the collapse of an exchange.
— Chainalysis (@chainalysis) November 23, 2022
US lawmakers ask DOJ to hold FTX execs accountable ‘to the fullest extent of the law’
Senators Elizabeth Warren and Sheldon Whitehouse have called on the Justice Department to investigate the collapse of FTX and potentially prosecute individuals involved in wrongdoing. The letter requested the Justice Department launch an investigation into crypto exchange FTX’s downfall with the “utmost scrutiny”. It cited the impact the collapse had on related companies including lending companies Genesis and BlockFi having to halt trading, and funds which FTX retail investors may not recover. The senators specifically called out former FTX CEO Sam Bankman-Fried for his role. It’s still not known if the Justice Department intends to launch an investigation into FTX, but other global financial regulators and lawmakers have taken action following the exchange’s collapse. Financial investigators and the Bahamas securities regulators were reportedly investigating possible criminal misconduct and Turkey’s Financial Crimes Investigation Agency has launched an investigation into individuals and entities associated with FTX. Read More:
- FTX collapse being scrutinized by Bahamas authorities
- FTX.COM TICARI UNVANIYLA FAALIYET GÖSTEREN KRIPTO VARLIK ALIM SATIM PLATFORMU HK.
Sam Bankman-Fried still speaking at events and the community is furious
Former FTX CEO Sam Bankman-Fried is still speaking at events, a fact which hasn’t gone unnoticed by the unimpressed crypto community. Next Wednesday 30th Nov, SBF is due to speak at The New York Times DealBook Summit. NYT journalist Andrew Sorkin has confirmed his attendance, saying “There are a lot of important questions to be asked and answered. Nothing is off limits.” The New York Times has said he had been invited months ago before the collapse and that he would most likely be participating virtually from the Bahamas.
I’ll be speaking with @andrewrsorkin at the @dealbook summit next Wednesday (11/30). https://t.co/QocjPtCVvC
— SBF (@SBF_FTX) November 23, 2022
ConsenSys Reveals It will start collecting User Data on MetaMask users
Alright this Metamask privacy lapse is yet another dumb move from Consensys.
Shill me your best easy self-hosted nodes either hardware or SaaS service.
Whichever I pick, I’ll give away a few freebies of, to at least 3 people who retweet this to promote privacy!
— Adam Cochran (adamscochran.eth) (@adamscochran) November 24, 2022
Bitcoin.org’s ‘Cøbra’ Must Unmask to Challenge Craig Wright’s Legal Costs, UK Court Rules
Self-proclaimed inventor of Bitcoin Craig Wright has been granted permission to serve legal papers on Cøbra in his latest attempt to gain recognition of what he claims is his ownership of copyright to the Bitcoin white paper. The High Court in London has ruled that Cøbra, the pseudonymous operator of bitcoin.org must reveal their identity should they want to contest the legal costs demanded by Wright. Wright accused Cøbra and bitcoin.org of infringing his rights after the website published the white paper, attributed to Satoshi. Typically, unidentified defendants are not required to reveal themselves and their addresses, but here, Cobra, through their representatives, challenged Wright’s legal costs. To do so they must drop their anonymity, a judge has said. Judge Rowley also said that should Cøbra not wish to unmask themselves, they can request anonymisation, but this will not prevent Wright from learning their name. Likelihood of Cobra revealing their identity, close to zero. Fury of most of the crypto community at this ruling, massively high. Read More: Bitcoin.org’s ‘Cøbra’ Must Unmask to Challenge Craig Wright’s Legal Costs, UK Court Rules
American regulators to investigate Genesis Lending and other crypto firms
Securities regulators in the United States are reportedly investigating crypto firms including lending firm Genesis Global Capital. Joseph Borg, director of the Alabama Securities Commission confirmed that its state and several other states are participating in inquiries regarding alleged ties to retail investors. The regulators are reportedly investigating if Genesis and other crypto firms might have violated securities laws by influencing investors on crypto-related securities without obtaining the proper registration. Read More: Crypto Lender Genesis Is Subject of Probe by Regulators
IIROC-registered Canadian crypto exchange Coinsquare suffers data breach
Crypto exchange Coinsquare has suffered a data breach that compromised users’ personal information one month after becoming the first Canadian crypto trading platform to get registered by the Investment Industry Regulatory Organization of Canada (IIROC). The leaked database included users’ personal information including ‘names, email addresses, residential addresses, phone numbers, dates of birth, device IDs, public wallet addresses, transaction history, and account balances’ but it said their crypto assets remain safe and that no passwords were exposed. Coinsquare temporarily shut down operations to investigate an unusual activity on its platform. It admitted that their customer database with personal information was exposed during the incident, which most likely accessed by a third party.
We will be taking a maintenance window at 12 am EST to 4 am EST on Nov 22 2022. During this window, we will complete the system updates required to bring our system back to full functionality. During this window, web and mobile applications will be unavailable.
— Coinsquare (@Coinsquare) November 22, 2022
FSMA Warns against Clone of CoinDesk and 30 Fraudulent Trading Platforms
Belgium’s financial market regulatory watchdog, The Financial Services and Markets Authority has flagged 30 online trading platforms offering unlicensed services, including a clone of CoinDesk, which at time of writing is no longer active. These fraudulent sites present a broad mix of contracts for difference, wealth management and cryptocurrency trading services. Some of these fraudulent platforms include ApexCryptoLive, Bitnexltd, FortuneFX, Spotchains, Vexxsel and a clone website of CoinDesk dubbed Coinsdesk (coinsdesk.org). The listed platforms reportedly ‘act “very aggressively” to obtain new clients and persuade the victims to grant remote access to their personal computers’. Their tactics reportedly include ‘encouraging people to deposit growing sums of money after unsuccessful investments and providing the option to withdraw funds after making one more final deposit.’ Read More: FSMA Warns against Clone of CoinDesk and 30 Fraudulent Trading Platforms
Estonian Police Arrests Two In $575 Million Scheme, Polybius Bank, HashFlare
Estonian Police have arrested two men accused of defrauding investors of $575 million. The defendants faked running a cryptocurrency mining platform, HashFlare, and a digital assets bank, Polybius Bank where victims invested both crypto and fiat currencies. They received crypto funds from hundreds of thousands of users and operated the fake businesses from 2015 to 2019 which officials say acted as a pyramid scheme. According to the U.S. Department of Justice (DOJ), they used the stolen funds to purchase real estate and luxury cars and used shell companies to launder money. Read More: Estonian Police Arrests Two Scammers In $575 Million Scheme
Binance plans $1b Recovery Fund, Bybit launches $100m fund for institutional traders
Binance plans to allocate $1 billion for a proposed crypto industry recovery fund. The fund is aimed at providing financial support to promising crypto projects in financial distress, following the collapse of FTX. Crypto derivatives exchange Bybit has also launched a new $100 million support fund to help institutional traders access liquidity in the wake of the FTX collapse. This fund is available to market makers and high-frequency trading institutions struggling with financial or operational difficulties resulting from the fall of FTX. Read More: Binance’s Zhao Flags Possible $1 Billion for Distressed Assets
Amazon Beats Apple For Rights To Produce Series About The FTX Disaster
The FTX saga is coming to Amazon after a fierce bidding war with Apple, Netflix, and other major Hollywood studios for the rights. The drama will reportedly be released as an 8 part limited series, and will apparently be based on an upcoming book from ‘The Big Short’ author Michael Lewis. Read More: Amazon Beats Apple For Rights To Produce Series About The FTX Disaster
Genesis lending arm calls in restructuring expert in its fight to avoid bankruptcy
Cryptocurrency lending firm Genesis Global Capital has reportedly hired the same restructuring adviser that Voyager Digital used, to explore its possible options. It is understood that investment bank Moelis & Company is exploring all options, while people familiar with the situation have reportedly stressed that no financial decisions have been made and that it may still avoid a bankruptcy filing. A Genesis spokesperson said it has no “imminent” plans to file for bankruptcy following a Nov. 21 Bloomberg report which suggested otherwise. Read More:
- Crypto Brokerage Genesis Is Said to Warn of Bankruptcy Without Funding
- Genesis, the Troubled Crypto Lender, Hires a Restructuring Adviser
Warning to avoid crypto paper wallets they find on the street, latest crypto scam
Authorities have warned Australians to stay away Bitcoin paper wallets found on the street or in public places. This latest scam sees scammers strewing fake paper Bitcoin wallets in public locations such as streets or parks which will ultimately drain victims of their own crypto holdings if they scan them. The paper cryptocurrency wallets feature QR codes and are made to appear like legitimate Bitcoin paper wallets. If a victim scans the QR code, they are directed to click on a link to access a crypto wallet with up to $16,000 Australian dollars ($10,000). They are then asked to pay a withdrawal fee and provide their own wallet credentials which it says will allow them to transfer the balance into their own crypto wallet. “Once the withdrawal fee is paid and person’s crypto wallet details provided, the person’s cryptocurrency is stolen from their crypto wallets,” explained the NSW police. Crypto scams tend to go to new markets quickly. Anyone finding a crypto paper wallet should not scan it however genuine it may look.
Russia intends to launch a ‘national crypto exchange’
Russian lawmakers are working on amendments to launch a national crypto exchange in a move reportedly supported both by the Ministry of Finance and the Central Bank of Russia. These two bodies have a long history of disagreement over crypto regulation in the country.
The head of Duma’s Committee on Financial Market, Anatoly Aksakov, suggested in June that a national crypto exchange in Russia could be part of the Moscow Exchange, “a respectable organization with long traditions.” The Moscow Exchange drafted a bill on behalf of the central bank in September to allow trading in digital financial assets. Read More:
- На Мосбирже планируется выпускать расписки на цифровые активы
- В Госдуме начали подготовку регулирования для создания российской криптобиржи
Starling bank bans crypto-related purchases and deposits citing high risk
The UK’s Starling bank is the latest to join the bandwagon of those banning its customers from purchasing crypto with their bank cards or receiving transfers from crypto merchants. The bank tweeted this news, saying ‘Hi there We always review our position in relation to financial crime. We consider crypto activity to be high risk. We’ve taken the decision to prevent all card payments to crypto merchants and to implement further restrictions on outgoing and incoming transfers.’ The bank cited the perceived high risks of crypto trading. Many in the industry have pointed out the irony of banks not also banning other high risk activities, such as gambling, or buying cigarettes or alcohol etc.
Hey @StarlingBank i recieved a notification in app saying you no longer support crypto transactions? What happened guys I really loved banking with you.
— CryptoLetsGo (@CryptoLetsGo3) November 22, 2022
Co-Founder Of $3 Billion Crypto Company Amber Group Dies Suddenly At 30
Tiantian Kullander, the co-founder of the Amber Group, a cryptocurrency company which was valued at $3 billion earlier this year, died in his sleep on November 23. Details about the cause and circumstances surrounding his death have not yet been made public. His unexpected death comes less than a month after another young crypto leader, 29-year-old MakerDAO early developer Nikolas Mushegian died from drowning in Puerto Rico. Read More：
- Young Crypto Founder Shocks Industry With Sudden Death at 30 in His Sleep
- Early MakerDAO Developer and Stablecoin Pioneer Found Dead in Puerto Rico
- Tiantian Kullander, Co-Founder Of $3 Billion Crypto Company, Dies At 30
UK crypto fraud over $270 million in the last year
Crypto fraud in the UK has climbed by a third to over $270M – with fraudsters now having many new ways to separate people from their crypto. Total fraud in the UK is up to $1.5 billion since 2021, in what police describe as an ‘epidemic’ that began during the pandemic. Read More:
UK Lawmakers Support Easy Seizure of Crypto Linked to Terrorist Activity
UK lawmakers have voted in favour of proposed rules to make it easier for law enforcement to target crypto linked to crime. The rules include reforms that can help authorities combat local crime and were proposed as amendments to the Economic Crime and Corporate Transparency bill. “This addresses a gap in current counterterrorism legislation,” Tom Tugendhat, the minister of state responsible for crime and terrorism regulation said. Read More: UK Lawmakers Support Easy Seizure of Crypto Linked to Terrorist Activity
Crypto lender Matrixport seeks $100M funding despite lending crisis
Cryptocurrency lending firm Matrixport which was founded by Bitmain co-founder Wu Jihan, is currently trying to raise $100 million funding despite the ongoing crypto market crisis. Lead investors have reportedly already committed $50 million to the new funding round at a $1.5 billion valuation. The company is one of the largest cryptocurrency lenders in Asia and says it hasn’t yet been overly affected by the current market. Read More: Crypto Lender Seeks $1.5 Billion Funding Value Despite FTX Chaos
We're excited and look forward to engaging with participants, on similar terms, in the other half of the #funding round.
Appreciate the trust and confidence our investors continue have in Team #Matrixport.@business 📰👇https://t.co/DqQhsYucUy
— Matrixport (@realMatrixport) November 25, 2022