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Cryptocurrency, Blockchain, and Fintech News Headlines Update on 2022-12-06

The third crypto mogul in a month has mysteriously died, this week it’s a Russian with alleged ties with Moscow’s foreign intelligence in an unexplained helicopter crash. Liquidators for now defunct crypto fund Three Arrows Capital (3AC) can’t find its founders so are now looking to serve legal documents via Twitter. More crypto exchanges have cut large percentages of their workforce citing market conditions. And what happened to FTX’s missing $8 billion? SBF, and lawyers, try and answer…

Enterprise blockchain platforms quietly failing? Maersk Quietly Quits TradeLens

Two private blockchain projects have quietly shut up shop in the last few weeks. TradeLens, a blockchain system developed by Maersk and IBM has shut down. The Australian Securities Exchange also shelved its blockchain project, which had been intended to improve transaction settlements. The reasons given were that the distributed ledger tech wound up being too complex and the Australian project was delayed by over two years in its roll out. There are some cases where blockchain is seen to be a solution in search of a problem.

3AC bankruptcy process faces challenges amid unknown whereabouts of founders

Liquidators for Three Arrows Capital (3AC) are now looking to serve legal documents to its founders via Twitter. A judge has ruled the liquidators will have to present further documents to get permission to subpoena the now-bankrupt crypto hedge fund’s founders through Twitter. Lawyers representing the liquidators in the process claimed that the founders of 3AC, Zhu Su and Kyle Davies, repeatedly failed to engage with liquidators in the past months. The founders are now reported to be in Indonesia and the Emirates, which reportedly have difficulty enforcing foreign court orders. The liquidators claim to have taken control of $35.6 million in fiat currencies and over 60 types of tokens which are being held in a digital currency custody account under liquidators’ control. Companies are thought to be owed $3.5 billion by 3AC.

The unraveling of $3 billion crypto lender BlockFi amid FTX’s ‘death spiral’

Crypto lender BlockFi’s bankruptcy filings show the decline in the crypto market, a $100 million fine to the SEC and assets held on FTX led to its demise. BlockFi filed for Chapter 11 bankruptcy on Monday. Bankruptcy filings show it still owed $30 million to the SEC. Its bankruptcy filing shows BlockFi has over 100,000 creditors, with liabilities and assets ranging from $1 billion to $10 billion, with one of the largest being “West Realm Shires,” the company publicly known as FTX.US, which has a $275 million unsecured claim. A lawyer for BlockFi has said that it is owed a total of roughly $1 billion by FTX and Alameda. BlockFi has $355 million stuck on FTX, and it claims Alameda Research has defaulted on a $680 million loan. FTX.US extended a $400 million line of credit to BlockFi in July, following its impact by the Terra collapse, the $275 million is what it still owes. Read more: The unraveling of $3 billion crypto lender BlockFi amid FTX’s ‘death spiral’, according to bankruptcy filings

Key Events in BlockFi's History

Tether Founder Responds To Concerns Over Not Publishing USDT Reserves

The downfall of several crypto platforms has led to a certain pressure on crypto platforms to reveal transparency reports of their holdings. USDT stablecoin Tether, which has long attracted controversy over its reserves, has not disclosed such transparent reports. A WSJ report has mentioned that Tether has allegedly been operating without transparency. The report revealed that Tether has allegedly been lending its token to users instead of making sales for cash and that it has refused to disclose all the loans it issued using the stablecoin. These accusations are the latest in a string of doubts about the stability of Tether’s USDT as the issuer failed to be more transparent. There are several amongst us who have been long expecting Tether’s demise at any time and who will find it hard to resist saying I told you so when it does. The New York Attorney General office found that “Tether deceived clients and market by overstating reserves [and] hiding approximately $850 million in losses around the globe.”

Crypto exchanges Bybit, Kraken and Swyftx cut 30, 40% of workforce

Top 10 by volume crypto exchange Bybit has laid off 30% of its workforce, citing the current difficult market conditions. This is the the second time this year it has conducted layoffs. CEO Ben Zhou said the layoffs are part of an ongoing reorganization of the Singapore-based company, and that its top priority is to keep business operations running smoothly and client funds secure. Crypto exchange Kraken is laying off 30% of its global workforce, 1,100 people, after saying it was in hiring mode earlier this year. Australia-based exchange Swyftx has also cut around 40% of its staff following the collapse of FTX.

Nexo to Phase Out Service in US After Hitting ‘Dead End’ With Regulators

U.K. crypto lender Nexo has said it would gradually phase out of the US in the coming months and suspend access to its Earn product in eight states from tomorrow. It said this was due to hitting a “dead end” with US regulators, saying it had been talking with regulators for 18 months but the U.S. “refuses to provide a path for enabling blockchain businesses.” This comes at a time when crypto lenders have struggled to stay afloat, with BlockFi, Voyager, and Celsius already having collapsed. Some in chat forums are advising those with money in Nexo to withdraw their funds as a precaution. Read more: Nexo Announces Gradual Departure from the United States

Russian Crypto Billionaire Dies In Helicopter Crash, third suspicious death in a month

A 53 year old Russian said to have ties with Moscow’s foreign intelligence died in a mysterious helicopter crash in France, in good conditions in broad daylight with an experienced pilot. The pilot is also said to have died in the crash. Another passenger who was allegedly due to travel cancelled just before the flight. Crypto businessman Vyacheslav Taran was founder of Forex Club and Libertex. This is the third suspicious death of a crypto mogul in a month. Tiantian Kullander, the 30 year old founder of Amber Group, died “in his sleep” last week. Another millionaire, Nikolai Mushegian, aged 29, drowned on a Puerto Rico beach, although Mushegian had allegedly battled with both drink and mental illness.

Hackers Steal $4.3 billion in Crypto in Nine Months

Hackers have stolen $4.3 billion in crypto in the first 11 months of 2022, up 37% since last year. New research by cybersecurity and data privacy firm, Privacy Affairs, has found of the 11 biggest cryptocurrency scams committed this year, the top five are the failure of FTX, March’s hack on Axie Infinity’s Ronin Network, ($615 million), February’s Wormhole crypto bridge hack, ($320 million), the JuicyFields.io scam ($273 million) and the Unique-Exchange.co/PARAIBA world scam ($267 million), both in July. They found that the cryptocurrencies most used by scammers are Bitcoin (70%), Tether (10%) and Ether (9%). DeFi protocols reportedly accounted for 97% of all stolen cryptocurrency during the first quarter of the year. They also found the the number of cases of crypto flash loan schemes to be on the rise. Read more: Cryptocurrency Scams in 2022 – Statistics & Trends

Sam Bankman-Fried (Vaguely) Addresses $8 Billion + Balance Sheet Deficit

Investigations have been ongoing to determine the location of the hole in FTX’s balance sheet, which is now estimated at $8 billion, although this number seems to keep growing. In a recent interview, former CEO Sam Bankman-Fried vaguely revealed the whereabouts of the funds. He said he paid a net amount of $2.5 billion to buy out Binance’s investments, that he spent $250 million on real estate and about $1.5 billion on other expenses. He listed $1 billion as having gone to “fuckups.” Around $4 billion and $1.5 billion went into separate venture capital investments to acquire other firms, figures which they allegedly counted as $1 billion by mistake. SBF says he paid so little attention to expenses that he didn’t realise he was spending too much, and that the billions of dollars customers wired to Alameda Research were gone because the companies were spending more than they made. Most seem to believe FTX was a fraud from the start and not a series of mistakes as SBF claims. We’ll see. Read more: Sam Bankman-Fried says he paid so little attention to expenses that he didn’t realize he was spending too much, report says

Sam Bankman-Fried: how to pay lawyers is a ‘concern’ after fortune ‘close to nothing’

Sam Bankman-Fried says he’s “trying to figure out” how to pay his lawyers, saying this is a “concern.” This, after his fortune plummeted from around $16 billion to “close to nothing” on the collapse of FTX. His father has previously said he would be “spending substantially all his resources on Sam’s defense.” SBF said he had “no idea” about the status of his personal finances and that the last time he checked he had $100,000 in his bank account. Read more: Sam Bankman-Fried says figuring out how to pay his lawyers is a ‘concern’ after his fortune fell to ‘close to nothing’

FDIC ‘looking closely’ at Farmington State Bank in FTX fiasco

The Federal Deposit Insurance Corp and the Federal Reserve are together “looking closely” at Farmington State Bank, the tiny bank owned by a controlling stake by FTX. Martin Gruenberg, acting chairman of the Federal Deposit Insurance Corp. has said he is also considering other ways FTX might have ties to the banking sector. Read more: FDIC ‘looking closely’ at Farmington State Bank in FTX fiasco

Genesis Creditor Groups’ Loans Amount to $1.8B and Counting

The total money locked up on crypto trading and lending platform Genesis is now thought to be at least $1.8 billion of loans. Of this, $900 million is allegedly owed to clients of crypto exchange Gemini. A second group of creditors also have loans totalling around $900 million locked on the platform. The issue derives from the collapse of FTX in which Genesis is one of the largest creditors. Gemini also saw one of the largest bank runs on deposits by customers concerned about keeping crypto in its centralised platform.

FTX Bankruptcy Sparks Worldwide Disputes Between Governments and New CEO

The fall of FTX has reportedly set off clashes between its newly appointed CEO John J. Ray III and regulators around the world. The securities regulator in Cyprus has criticised the decision to place FTX in bankruptcy, saying this has hurt investigations and is preventing European customers from recovering their funds. Officials in the Bahamas have accused Ray of making false statements and have suggested that his team is motivated by the chance to earn large legal fees.Authorities in Turkey have seized the assets of FTX’s local subsidiary, which goes against Ray’s efforts to move all of the company’s assets to its bankruptcy proceedings.

Regulators face public ire after FTX collapse, experts call for coordination

The role of regulators has been heavily scrutinized in the wake of FTX’s collapse, especially as a result of the alleged close ties between former CEO Sam Bankman Fried and policymakers, including the role that several alleged substantial donations to political parties may have played. ‘Some reports indicate that eight congresspeople, five of whom received donations from FTX, tried to stop the Securities and Exchange Commission from investigating FTX.’ Coinbase CEO Brian Armstrong tweeted a reply to Senator Elizabeth Warren pushing for more aggressive enforcement, echoing the words of basically the entire crypto industry, that ‘FTX was an offshore exchange not regulated by the SEC. The problem is that the SEC failed to create regulatory clarity here in the US, so many American investors (and 95% of trading activity) went offshore. Punishing US companies for this makes no sense.’ Ie – all unclear regulation has done is push 90%+ of crypto companies offshore, meaning they can still affect UK or US based citizens but with basically no regulation at all. Some have added that regulators are still working through a heavy backlog.

New York proposes to charge crypto companies for regulating them

The New York State Department of Financial Services has submitted a proposed change in state laws to allow it to charge licensed crypto companies for regulating them. It is common practice to charge licensed non-crypto financial entities for the cost and expenses of maintaining oversight over them. Essentially, they say they’re looking to bring virtual currency businesses in line with other regulated financial entities in the state. Read more: DFS SUPERINTENDENT ADRIENNE A. HARRIS ANNOUNCES NEW PROPOSED VIRTUAL CURRENCY ASSESSMENT REGULATION

Opera Crypto Browser to enable instant NFT minting through launchpad

Opera browser has partnered with Alteon LaunchPad to let beginners in Web3 or the NFT space easily mint NFTs on its platform. With the integration, users will be able to use a feature to drag and drop media files into the browser, which writes a smart contract and uploads the file into a blockchain, turning the files into NFTs. An exec at Opera said “Now, our users will be able to create NFTs instantly and simply with no platform usage fees, encouraging more people to explore the burgeoning NFT industry.”

Coinbase Wallet Says Apple Blocked Its Feature for Sending NFTs

Coinbase has disabled its NFT sending feature. Coinbase said Apple has blocked its wallet’s latest app release until it disabled a feature on Coinbase Wallet iOS that enabled sending non-fungible tokens (NFTs). Coinbase added that Apple wanted the gas fees — blockchain transaction fees — required to send NFTs to be paid through its in-app purchase system so that it could collect 30% of the fees, which isn’t possible because Apple’s proprietary in-app purchase system doesn’t support crypto. “This is akin to Apple trying to take a cut of fees for every email that gets sent over the open Internet protocols” Coinbase Wallet tweeted. In short, Apple is wanting its usual 30% fees.

‘Digital Garbage?’ EU Throws $400,000-Metaverse Party That Only Attracted 6 People

The EU this week spent $400,000 or EUR387,000 on a ‘Metaverse party’ that was supposed to be “fun with music”. It was intended to encourage young people to explore the so called limitless possibilities of the metaverse. Despite the huge spend, a humiliating only six individuals showed up. Among them a correspondent who said the party was an “immediate flop.” Some of the words used to describe the party by insiders included “digital garbage” and “depressing and embarrassing.” The metaverse really isn’t everything. Some might be slowly realising this. This gross expenditure was despite there being plenty of things the EU could have spent its money on that would be actually good, like animal shelters, or refugees.

Animoca creates billion-dollar metaverse fund for developers

GameFi champion and metaverse developer Animoca Brands reportedly has a billion-dollar fund in its plans. Co-founder Yat Siu said the fund could potentially have up to $2 billion dollars to allot to mid to late-stage startups with a metaverse focus.

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