Crypto Roundup for January 20, 2023
By djKUPO | Blockchain in Paradise
Genesis Owes Over $3.5B to Top 50 Creditors (CoinDesk)
"Crypto exchange Gemini, trading giant Cumberland, Mirana, MoonAlpha Finance and VanEck’s New Finance Income Fund are among the 50 largest of Genesis' creditors, according to a bankruptcy filing published late Thursday night. Crypto lender Genesis filed for bankruptcy protection during the late U.S. hours of Thursday in what it called a “strategic [action] to achieve a global resolution to maximize value for all clients and stakeholders and strengthen its business for the future.”"
New FTX Chief Says Crypto Exchange Could Restart (WSJ)
"FTX’s new chief executive, John J. Ray III, said he is looking into the possibility of reviving the bankrupt crypto exchange as he works to return money to the failed company’s customers and creditors. In his first interview since taking over FTX in November, Mr. Ray said that he has set up a task force to explore restarting FTX.com, the company’s main international exchange. Although top FTX executives have been accused of criminal misconduct, some customers have praised its technology and suggested that there would be value in rebooting the platform, he said."
Crypto Lender Nexo Pays $45 Million in Fines to SEC, States (Bloomberg)
"Digital-asset firm Nexo Capital Inc. will pay $45 million in penalties to US federal and state regulators over allegations that it broke securities rules by offering a crypto lending product. The Securities and Exchange Commission on Thursday said that Nexo’s Earn Interest Product amounted to a security that should have been registered with the agency. It’s the latest in a series of cases that Wall Street’s main regulator has brought over similar products."
Flashbots Seeks up to $50 Million at a Billion-Dollar Valuation (The Block)
"Flashbots, an Ethereum infrastructure service, is in discussions with potential backers about raising up to $50 million at a billion-dollar valuation. The startup hopes to raise between $30 million and $50 million in equity investment at a $1 billion pre-money valuation, according to two people with knowledge of the deal and an excerpt of the offering obtained by The Block."
Peter Thiel’s Fund Sold Bitcoin Holdings as Downturn Intensified, Fed Hiked Rates: FT (The Block)
"Peter Thiel's Founder Fund sold its bitcoin holdings last year as the market decline intensified. The fund, which invests in "revolutionary technologies that reshape the way we interact with the world," sold most of its bitcoin holdings by March 2022, according to a report from the Financial Times. The sale generated $1.8 billion, people familiar with the matter told the newspaper. Around the same time, Thiel, known for founding roles at PayPal and Palantir and investing in Facebook, spoke at Bitcoin 2022 in Miami. The famed investor spent part of his keynote comparing the different purposes of Bitcoin and Ethereum."
US Authorities to Announce International Crypto Enforcement Action (The Block)
"U.S. authorities plan to announce an enforcement action against an international crypto entity at noon ET today. Representatives from the FBI, the Office of Foreign Asset Control (OFAC), the Financial Crimes Enforcement Network (FinCEN) and the Eastern District of New York will take the stage with Deputy Attorney General Lisa Monaco to release the news, according to an announcement."
US Charges Crypto Exchange Bitzlato With Laundering $700M (CoinDesk)
"The U.S. Justice Department and Treasury Department have charged Bitzlato Ltd. with money laundering and arrested its founder in Miami, officials said at a press conference in Washington on Wednesday. Bitzlato, a Hong Kong-based platform, has been effectively shut down, and founder Anatoly Legkodymov was taken into U.S. custody, moves that will stop Bitzlato from catering to criminals tied to Russia, Deputy Attorney General Lisa Monaco said at the press conference. She outlined the coordinated enforcement actions, which also included the Federal Bureau of Investigation, French authorities and the U.S. Treasury Department, saying they disrupted "a busy corner of this criminal ecosystem.""
Crypto Conglomerate DCG Suspends Dividends Amid Distress at Genesis Unit (CoinDesk)
"Cryptocurrency conglomerate Digital Currency Group has informed its shareholders the firm is suspending dividends until further notice. "In response to the current market environment, DCG has been focused on strengthening our balance sheet by reducing operating expenses and preserving liquidity. As such, we have made the decision to suspend DCG's quarterly dividend distribution until further notice," DCG said in a letter to shareholders sent on Tuesday."
Coindesk Explores Full or Partial Sale to Attract Growth Capital, CEO Says (The Block)
"Crypto media outlet CoinDesk may pursue a full or partial sale to fuel future growth, CoinDesk confirmed to The Block. CoinDesk is seeking advisory services from Lazard, a firm specializing in mergers, restructuring and capital strategy, as the company explores a potential sale, The Wall Street Journal first reported. “Over the last few months, we have received numerous inbound indications of interest in CoinDesk. As such, I have engaged Lazard as our financial advisor to assist. My goal in hiring Lazard is to explore various options to attract growth capital to the CoinDesk business, which may include a partial or full sale,” CEO Kevin Worth told The Block in a statement via email."
Genesis Creditors Negotiating Prepackaged Bankruptcy (The Block)
"Genesis Global Capital creditors are negotiating a prepackaged bankruptcy plan with the firm, two sources familiar with the talks told The Block. Creditors like the Winklevoss twins' Gemini would agree to a forbearance period — in most of the payments — of between one and two years under the prepackaged bankruptcy plan, according to one of the sources. In exchange, creditors will receive cash payments and equity in Genesis parent company Digital Currency Group, the source said."
Crypto Media Outlet CoinDesk Taps Bankers for Potential Sale (WSJ)
"CoinDesk Inc., a cryptocurrency-focused media company, has retained investment bankers at Lazard Ltd. to help it explore options including a partial or full sale, according to its chief executive officer. “Over the last few months, we have received numerous inbound indications of interest in CoinDesk,” CoinDesk CEO Kevin Worth said. CoinDesk’s parent company, Digital Currency Group Inc., or DCG, has received multiple unsolicited offers north of $200 million in the past few months, according to people familiar with the matter. DCG acquired the media company in 2016 for $500,000, the people said. CoinDesk generated $50 million in revenue last year from online advertising as well as its index and events business, they said."
HashKey Capital Raises $500M for 3rd Crypto Fund (CoinDesk)
"HashKey Capital, the investment arm of financial-services firm HashKey Group, has closed its third fund with $500 million in committed capital. The fund will invest in crypto and blockchain initiatives around the world with a focus on emerging markets. HashKey FinTech Investment Fund III was backed by institutional investors, including sovereign-wealth funds, businesses and family offices, according to a press release Tuesday. It will invest in infrastructure, tools and applications that could achieve mass adoption."
EU’s Final Vote on MiCA Regulation Postponed Until April (The Block)
"The European Union’s landmark crypto regulation, Markets in Crypto Assets (MiCA), won’t see a final vote in the European Parliament until April, stalling the process for the new rules to be enforced. The delay is “technical” and most likely caused by issues in translating the almost 400-page file into the 24 official languages of the bloc, an EU Parliament spokesperson told to The Block."
FTX Debtors Give Details on Digital Assets Identified So Far (CoinDesk)
"FTX Trading and its affiliated debtors, collectively known as the FTX Debtors, have provided details on the digital assets they’ve identified so far in their attempts to recover funds from the bankrupt crypto exchange and its subsidiaries, according to a press release on Tuesday. Roughly half of those digital assets are already under the control of FTX Debtors, but the other half was subject to unauthorized third-party transfers after FTX filed for bankruptcy protection, as well as transferred to the control of the Securities Commission of the Bahamas in the case of FTX.com, according to the group."
Silvergate Posts $1 Billion Loss as Crypto Industry Suffers a ‘Crisis of Confidence' (The Block)
"Crypto-focused bank operator Silvergate reported a more than $1 billion net loss for the fourth quarter as the sector suffered a "crisis of confidence." Silvergate posted a net loss of $1.05 billion for the quarter, compared with an $18.4 million profit in the same period a year earlier, according to a statement. The company reported a $751 million loss on securities and a $135 million impairment charge related to the estimated $1.7 billion of securities it expects to sell in the first quarter of 2023 to reduce borrowings."
SEC Racks up 50% Increase in Crypto Enforcement Actions in 2022 (The Block)
"The Securities and Exchange Commission brought a record number of crypto-related enforcement actions last year, up 50% from 2021, according to a new report from consulting firm Cornerstone Research. Last year's record of 30 crypto-related enforcement actions was second only to 2020, when the SEC brought 29 such actions. The most frequent allegations were fraud and unregistered securities, the firm found. Of those 30 enforcement actions, 70% alleged fraud, 73% alleged an unregistered securities offering and 50% alleged both."
BNB Chain Burns Over $500M in BNB Tokens (CoinDesk)
"BNB Chain has completed the burn of over $575 million worth of its native BNB tokens as part of a broader program, Binance said on Tuesday. The burn was executed at around 0800 UTC on Tuesday morning in transaction 34167E903B9F662A64817266D8A6CE4FE096868DAD0B883E4F838331E280EEFF, data shows. Token burn refers to the process of permanent deletion of coins from their circulating supply. Over 100 million BNB, or half of its total supply, are intended to be removed from circulation through a burning process and to eventually keep only 100 million BNB in circulation. This commitment is automatically honored each quarter and calculated according to the Auto-Burn formula, as previously reported."
Crypto Investor Justin Sun Says Willing to Spend Up to $1 Bln on DCG Assets (Reuters)
"Chinese crypto entrepreneur Justin Sun is willing to spend $1 billion of his own funds on buying assets belonging to Digital Currency Group (DCG), the parent company of embattled crypto lender Genesis, Sun told Reuters. Genesis froze customer withdrawals in November and said it was trying to avoid a bankruptcy filing. It owes its creditors more than $3 billion, according to a person familiar with the matter."
3AC Founders Zhu and Davies Pitch to Raise $25 Million for New Crypto Exchange (The Block)
"Su Zhu and Kyle Davies, the founders of collapsed crypto hedge fund Three Arrows Capital (3AC), are hoping to raise $25 million to start a new crypto exchange called GTX, according to two separate pitch decks obtained by The Block. News of the fundraise comes two months after exchange giant FTX imploded, leaving more than a million creditors out of pocket. The new exchange takes advantage of the situation offering depositors the ability to transfer their FTX claims to GTX and receive immediate credit in a token called USDG, the pitch deck said."
Accenture Exec Says Future of Crypto Self Custody Will Be Portability (CoinDesk)
IT services and consulting firm Accenture is leaning heavily on the potential of Web 3, according to David Treat, senior managing director at the company. Joining CoinDesk TV’s “First Mover” from the World Economic Forum (WEF) at Davos 2023, Treat said that metaverse-enabled capabilities, including augmented reality (AR), virtual reality (VR) and the ability to tokenize “identity, money and objects,” can simultaneously shift business models and tap into new revenue streams. In a survey earlier this year, the Dublin, Ireland-based consulting firm said that by late 2025, the metaverse is likely to fuel a $1 trillion opportunity for businesses."
Ex-President of FTX US Says Relationship With SBF Reached ‘Total Deterioration' (The Block)
"Brett Harrison, former president of FTX US, shared his experience at the company and working with Sam Bankman-Fried — and ultimately why he left his so-called "dream job." In a 49-part Twitter thread surpassing 1,200 words, Harrison claims Bankman-Fried showed emotionally volatile behavior, avoided conflict, pushed back against criticism and even isolated Harrison from communication on key decision-making. Nonetheless, according to Treat, it comes down to building “architectural patterns” that establish trust with users in the event something does go wrong."
A Crypto Magnate Saw the Risks and Still Was Hammered (WSJ)
"The cryptocurrency crunch is so bad even the pros are getting squeezed. A year ago, Barry Silbert’s 40% stake in Digital Currency Group Inc., or DCG, was valued at more than $3 billion. A crypto conglomerate, with tentacles in nearly every corner of the industry from lending to bitcoin mining, DCG worked out of plush Connecticut offices featuring a marble-countertop kitchen with a coffee barista and a French chef. Mr. Silbert is a 46-year-old finance veteran who began his career working on restructurings and dealing with downturns. Unlike many crypto executives, he tweeted warnings about the risky behavior he saw in digital assets, suggesting he anticipated what could go wrong."
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