Former Celsius CEO Mashinsky Sued by New York State for Defrauding Investors (CoinDesk)
"New York state’s attorney general has sued Alex Mashinsky, the former CEO of Celsius Network, for defrauding hundreds of thousands of investors by making false statements between 2018 and at least June 2022 about the condition of the company to encourage money to keep coming in. Attorney General Letitia James said the state intends to ban Mashinsky from doing business there, in addition to seeking damages and restitution for harmed investors, according to a Thursday statement."
Crypto Conglomerate DCG Closes Wealth-Management Business (CoinDesk)
"Digital Currency Group, the cryptocurrency conglomerate whose Genesis Global Trading division just announced more layoffs, said it's shutting down a wealth-management division called HQ. "Due the state of the broader economic environment and prolonged crypto winter presenting significant headwinds to the industry, we made the decision to wind down HQ" as of Jan. 31, the company said in a statement Thursday. "We're proud of the work that the team has done and look forward to potentially revisiting the project in the future.""
Three Arrows Capital Founders Subpoenaed by Tweet (The Block)
"Founders of the failed crypto hedge fund Three Arrows Capital were served subpoenas on Twitter by the fund’s liquidators, the latest wrinkle in the firm’s unusual bankruptcy case. Three Arrows Capital founders Kyle Davies and Zhu Su have been on the run since their billion-dollar hedge fund collapsed last year. Liquidators claim the pair have been reluctant to participate in bankruptcy proceedings, leading to the unusual Twitter subpoena."
Genesis Cuts 30% Of Staff in Latest Round of Layoffs (The Block)
"Genesis Trading began a new round of layoffs, reducing its workforce by 30%, a source familiar with the matter told The Block. "As we continue to navigate unprecedented industry challenges, Genesis has made the difficult decision to reduce our headcount globally. These measures are part of our ongoing efforts to move our business forward. We sincerely appreciate the hard work of our talented and dedicated team as we continue to work to identify the best outcome for Genesis’s business, clients and employees for the long-term," said a spokesperson for Genesis."
Crypto Exchange Huobi Says It Will Cut Staff by 20% (The Block)
"After days of rumors surrounding layoffs at Huobi, the Singapore-based crypto exchange confirmed it would cut about 20% of its overall staff. “The planned layoff ratio is about 20%, but it is not implemented now. With the current state of the bear market, a very lean team will be maintained going forward,” a Huobi spokesperson told The Block, adding: “The personnel optimization aims to implement the brand strategy, optimize the structure, improve efficiency and return to the top three.”"
Coinbase to Pay $100 Million Over Failure to Scale AML as Business Boomed (The Block)
"Coinbase reached a $100 million settlement with the New York Department of Financial Services following investigations into failures in its compliance program. The NYDFS fined Coinbase $50 million and required the company to invest another $50 million into its compliance program following a settlement with the regulator, which found gaping holes in the crypto exchange's review of customer identities and alerts on transactions. Particularly, it noted that the exchange failed to keep up with the growth in its customer base from 2020 through 2021."
SEC Files Limited Objection to Binance.US’s $1B Deal for Voyager Assets (CoinDesk)
"The U.S. Securities and Exchange Commission (SEC) has filed a limited objection to Binance.US's proposed $1.02 billion purchase of the assets of bankrupt crypto lender Voyager. In its filing, the SEC questioned the adequacy of the information in Binance.US’s disclosure statement, specifically details on the ability of the crypto exchange to “consummate a transaction of this magnitude,” as well as how Binance.US intends to secure customer assets and details on how Binance.US would rebalance its cryptocurrency portfolio."
Genesis Says It Needs More Time for Lending Crisis Solution (The Block)
"Crypto lender Genesis told clients on Wednesday that it's continuing to work toward finding a solution for its troubled borrowing and lending unit but that it will need more time to do so. "While we are committed to moving as quickly as possible, this is a very complex process that will take some additional time," interim CEO Derar Islim said in a letter to clients obtained by The Block. "We believe we can arrive at a solution.""
Celsius 'Earn' Assets Belong to Bankrupt Crypto Lender, Judge Rules (CoinDesk)
"A federal judge ruled that customers of Celsius's interest-bearing "Earn" product had turned over control of their assets to the bankrupt crypto lender, meaning they are part of the company's bankruptcy estate. Judge Martin Glenn, the chief U.S. bankruptcy judge in the Southern District of New York, said in a court order Wednesday that Celsius's terms of service made it clear it took possession of crypto assets deposited into its Earn product, dealing a blow to some customers hoping to recoup their funds from the company. Celsius held around $4.2 billion in various cryptocurrencies in its Earn product as of July 2022, with $23 million of that being in stablecoins."
Hong Kong Crypto Mogul Aims to Raise $1 Billion for Web3 Fund (Bloomberg)
"Animoca Brands Corp. is looking to raise about $1 billion this quarter for its new Web3 and metaverse investment fund, sharply scaling back its ambitions during the current crypto industry meltdown. Animoca Capital is in talks with potential investors and would use the money to support blockchain and metaverse startups, co-founder Yat Siu, who is also the chairman of Animoca Brands, said in a Twitter Spaces chat with Bloomberg in Hong Kong Thursday."
Bankman-Fried Pleads Not Guilty to Criminal Charges (The Block)
"Disgraced former FTX CEO Sam Bankman-Fried pleaded not guilty to fraud charges in a New York federal court on Tuesday. Bankman-Fried faces multiple charges, including wire fraud and campaign finance law violations, after his crypto exchange empire imploded last year. Bankman-Fried is accused of misusing FTX customer funds to prop up his crypto trading firm and make political donations, among other misdeeds. The not guilty plea was first reported by CNBC. The trial is expected to begin on Oct. 2."
U.S. Regulators Issue Post-FTX Collapse Crypto Warning to Banks (The Block)
"U.S. banking regulators remain skeptical of banks holding digital assets. The Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. put out a joint statement that reminded banks of their safety and soundness obligations and outlined risks they see in the cryptocurrency sector. Though the statement noted that banks aren't prohibited from doing business with companies that operate within the law, the regulators raised several red flags for those hoping to dive deeper into crypto-related activities."
Sam Bankman-Fried's Lawyers Ask Court to Conceal Identities of $250M Bail Co-Signers (CoinDesk)
"Lawyers for Sam Bankman-Fried asked a court to redact the names and identifying information of the two co-signers, in addition to his parents, for the former FTX CEO's $250 million bail, court filings from Tuesday show. In the filing, the lawyers cited privacy and safety concerns as reasons for requesting the concealment of identities. The lawyers were told the U.S. government takes no position on the request, according to the filing."
Ethereum Name Service Recorded Over 2.8M Domain Registrations in 2022 (CoinDesk)
"Ethereum Name Service (ENS) saw a lifetime record number of domain registrations in 2022 amid a broader market frenzy in which some traders treated the domains as investments. ENS is a decentralized domain name protocol that runs atop the Ethereum network. It provides users with an easily readable name such as “abc.eth” instead of a complex, long-form alphanumeric address for their crypto wallets, similar to the way the Domain Name System substitutes memorable names such as "coindesk.com" for websites' numeric internet-protocol addresses."
Crypto Miner Core Scientific to Shut 37,000 Celsius Rigs (Bloomberg)
"Celsius Network LLC has agreed to let Core Scientific Inc. shut off more than 37,000 crypto mining rigs that the bankrupt digital-asset lender hasn’t been fully paying for, resolving a months-long conflict. Core, a Bitcoin miner that hosts rigs for third parties, itself filed for bankruptcy last month and partially blamed non-payment by Celsius for its downfall. Their hosting deal allows Core to pass on some power costs to Celsius, but the company hasn’t been paying those bills since it filed for Chapter 11 protection in July, according to lawyers for Core Scientific."
Genesis-DCG Loan Leads to Class Action Arbitration Case From Gemini Clients (CoinDesk)
"Three Gemini Earn users have filed a request for class action arbitration against Genesis Global Capital and Digital Currency Group in response to Gemini suspending its Earn redemption program due to Genesis freezing withdrawals. DCG is also the parent company of CoinDesk. Class-action arbitration — a dispute resolution process where a neutral third-party arbitrator resolves disputes between parties — is often seen as an alternative to a class-action lawsuit. The arbitration process is usually voluntary and less formal. However, the decision of the arbitrator is binding and cannot be appealed, making the process potentially faster and less expensive than a class-action lawsuit."
Gemini’s Winklevoss, DGC’s Silbert Spar Over Frozen Funds on Genesis (The Block)
"Gemini co-founder Cameron Winklevoss accused Digital Currency Group head Barry Silbert of "bad faith stall tactics" and comingling funds at his conglomerate in a pointed open letter posted on Twitter early Monday that sought answers to why more than $900 million of his customers's funds are still inaccessible. Winklevoss, in a letter addressed to the DCG founder, said Gemini tried to engage with Silbert and DCG on numerous occasions but has been unable to move forward with its attempts to unlock funds despite the repeated efforts."
Bahamas Regulator Fires Back in Ongoing Feud With New FTX Leadership (The Block)
"Heated exchanges between authorities in The Bahamas and FTX’s new management have spilled over into the new year. The Securities Commission of The Bahamas (SCB) released a statement late on Jan. 2 seeking to correct “material misstatements” by John Ray III, who was appointed CEO of FTX following founder Sam Bankman-Fried’s resignation in November."
Crypto Asset Manager Valkyrie Investments Wants to Sponsor, Manage Grayscale Bitcoin Trust (CoinDesk)
"Crypto asset manager Valkyrie Investments wants to become the sponsor and manager of the Grayscale Bitcoin Trust (GBTC), the company said in a blog post this week. Valkyrie, one of Grayscale’s rivals, previously launched a bitcoin trust and a bitcoin-related exchange-traded-fund (ETF) in 2021. As part of their plan to sponsor GBTC, the world’s largest bitcoin fund, the Tennessee-based company also announced the launch of a new fund, the Valkyrie Opportunistic Fund, LP that seeks to take advantage of GBTC’s discount to the value of its underlying bitcoin, the company said."
Binance.US Deal With Voyager May Fall Under Federal Committee Review (The Block)
"An agreement between Binance.US and bankrupt crypto lender Voyager Digital may be subject to review by the Committee on Foreign Investment in the United States (CFIUS), court filings showed. The review’s outcome “could affect the ability of the parties to complete the transactions, the timing of completion, or relevant terms,” according to the notice."