FTX Looks for $9.4 Bln in Rescue Funds, Bahamas Freezes Some Assets (Reuters)
"FTX is scrambling to raise about $9.4 billion from investors and rivals, a source said on Thursday, as Chief Executive Sam Bankman-Fried urgently seeks to save the cryptocurrency exchange that has been buffeted by a rush of customer withdrawals. Bankman-Fried has discussed raising $1 billion each from Justin Sun, the founder of crypto token Tron, rival exchange OKX and stablecoin platform Tether, according to the source who has direct knowledge of the matter."
FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall (WSJ)
"Crypto exchange FTX lent billions of dollars worth of customer assets to fund risky bets by its affiliated trading firm, Alameda Research, setting the stage for the exchange’s implosion, a person familiar with the matter said. FTX Chief Executive Sam Bankman-Fried said in investor meetings this week that Alameda owes FTX about $10 billion, people familiar with the matter said. FTX extended loans to Alameda using money that customers had deposited on the exchange for trading purposes, a decision that Mr. Bankman-Fried described as a poor judgment call, one of the people said."
BlockFi Suspends Withdrawals After FTX Collapse (The Block)
"Crypto lender BlockFi suspended withdrawals and will not be able to operate business as usual given the lack of clarity over the status of FTX, the company said on Twitter. “We are shocked and dismayed by the news regarding FTX and Alameda,” the company tweeted. For the time being BlockFi will limit platform activity, and client withdrawals will be paused “as is allowed under our Terms,” the company said. No exact time frame was specified in terms of service restoration. Earlier in the day BlockFi said that it would delay the processing of ACH and wire transactions scheduled for Nov. 11 until Nov. 14, due to the observance of Veterans Day by its U.S. based-banking partner Silvergate. It is now unclear whether those delayed transactions will go through."
US Justice Department, Regulators Contacted Binance on FTX Talks: Source (CoinDesk)
"U.S. authorities including the Department of Justice have contacted crypto exchange Binance for information about its recent interactions with FTX in the two companies’ talks about a potential rescue, according to a person briefed on the situation. Binance has heard from U.S. financial regulators, the person said, in addition to regulators in Europe, requesting insight into what Binance executives learned this week about FTX’s internal workings. A spokesman for Binance declined to comment on the discussions. A Washington-based FTX official didn’t immediately respond to a request for comment."
FTX Assets Frozen by Bahamian Regulator (CoinDesk)
"Bahamian regulators have frozen the assets of FTX Digital Markets and related parties, calling it a “prudent course of action” to “preserve assets and stabilize the company,” according to a press release on Thursday. The Securities Commission of the Bahamas also suspended FTX’s registration and appointed an attorney – Brian Sims, a senior partner at Lennox Paton – as a provisional liquidator of the assets. FTX is based in the Bahamas and is a separate entity from FTX US. “The commission is aware of public statements suggesting that clients’ assets were mishandled, mismanaged and/or transferred to Alameda Research. Based on the commission’s information, any such actions would have been contrary to normal governance, without client consent and potentially unlawful,” the commission said in its release."
Binance Will Launch a New ‘Industry Recovery Fund’ (The Block)
"Binance will launch a new fund to help prop up crypto projects facing liquidity crunches. Changpeng Zhao, Binance’s CEO, tweeted about the plan early on Nov. 14. “To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon,” said Zhao, adding that qualifying projects can contact Binance Labs, the exchange’s venture capital arm."
Crypto.com CEO Dismisses Speculation of Financial Trouble, Says FTX Exposure Is Minimal (CoinDesk)
"Expect a tough crypto winter, but Crypto.com isn’t going anywhere, CEO Kris Marszalek said during a live interview hosted on its YouTube channel. Over the past week, Crypto.com’s CRO token has dropped almost 45% on concerns the Singapore-based exchange will be the next to face a liquidity crisis. The exchange’s daily volume has collapsed from last year's highs of around $4 billion to about $284 million this past October, according to data from Nomics, and withdrawals are on their way back up as users and investors remove their funds from the platform."
Over $400M Worth of Tokens FTX Funds Drained From Company Accounts (The Block)
"Crypto exchange FTX is seeing millions of dollars flow out of its exchange with early reports of some user account balances being completely empty. So far, over $400 million has been transferred to a single wallet address. The wallet has acquired tens of millions of dollars worth of several types of tokens by draining FTX accounts, and began selling tokens that it received from FTX. FTX's general counsel Ryne Miller claimed the exchange is "investigating abnormalities with wallet movements related to consolidation of FTX balances across exchanges – unclear facts as other movements not clear. Will share more info as soon as we have it. @ FTX_Official.""
FTX Latest: Employees Explore Sale of US Derivatives Exchange (Bloomberg)
"Sam Bankman-Fried’s digital-asset empire filed for Chapter 11 bankruptcy in Delaware. His crypto trading company, Alameda Research, listed at least $10 billion of assets and liabilities each. Cyprus has suspended FTX’s license to operate an investment business in Europe. The crisis could lead to a tightening of US and EU crypto regulations. Wider crypto markets were hit by the fallout, with Bitcoin falling more than 8% at one point."
FTX Had Only $900 Million in Liquid Assets Backing $9 Billion in Debt: FT (The Block)
"FTX had only $900 million in liquid assets against $8.9 billion in liabilities on the eve of bankruptcy, the Financial Times reports. Citing investment materials, the report noted that the largest easily sellable assets available to FTX were $470 million of Robinhood shares owned via an outside corporate entity belonging to CEO Sam Bankman-Fried. Despite being formally based outside of the U.S., $5.1 billion of the liabilities FT reported were in U.S. dollar balances."
Binance Crypto Exchange Says It Is Buying Rival FTX Following 'Liquidity Crunch' (WSJ)
"Crypto exchange Binance said Tuesday it signed a letter of intent to acquire rival FTX Trading, which it said was facing a liquidity crunch. FTX said it agreed to a strategic transaction with Binance, pending due diligence. The deal comes after a clash between the heads of the two firms came to a head in recent days and spurred a significant selloff in crypto assets including bitcoin. The deal marks an epic shakeup in the fast-moving world of crypto, where FTX CEO and founder Sam Bankman-Fried had positioned himself as one of the rare buyers of assets during a yearlong shakeout. With the acquisition Binance stands to emerge as the unchallenged leader among crypto exchanges, while subjecting Mr. Bankman-Fried to a painful comedown."
FTX Exchange Halts All Crypto Withdrawals (CoinDesk)
"Crypto exchange FTX has halted all non-fiat customer withdrawals, an FTX support employee confirmed in the company's official Telegram group Tuesday afternoon. "Any transfers besides fiat are halted," wrote the FTX Support employee. The halt highlights the deteriorating condition of the exchange, which was previously still processing withdrawals, albeit at a slower pace. Many FTX customers in Telegram posted that they had been waiting hours to withdraw their funds."
Circle CEO Allaire Calls FTX Crisis Crypto’s ‘Lehman Brothers’ Moment (The Block)
"Jeremy Allaire, co-founder and CEO of Circle, said the FTX insolvency crisis, which has thrown the crypto market into turmoil, is the "Lehman Brothers" moment for crypto. "Finally, as someone who's been involved in this industry for 10 years, it is disappointing that a technology that was spawned in reaction to the Lehman Bros. moment of 2008 has given rise to its own version of the same," he said. Lehman Brothers, of course, helped set off the 2008 global financial crisis."
Binance Tops up Backstop Fund With $215 Million in Bitcoin and BNB (The Block)
"Binance has topped up an emergency fund designed to protect users following pronounced volatility in crypto markets triggered by the exchange giant's dispute with — and subsequent surprise rescue deal for — rival FTX. Changpeng Zhao, CEO of Binance, said in a tweet that the exchange had added funds to its Secure Asset Fund for Users (SAFU) “to adjust to recent price fluctuations,” and to ensure that it again contains $1 billion worth of crypto. Binance moved 194,500 BNB ($62 million) and 8,325 BTC ($153 million) into the SAFU fund, according to The Block Research’s analysis — a deposit of $215 million in total. A Binance spokesperson had declined to specify the size of the top-up, but Zhao said in his tweet that SAFU's BNB balance had been brought to over $700 million and its bitcoin balance to $300 million."
Bankman-Fried’s Priority Crypto Bill ‘Dead’ After FTX Sells to Binance (The Block)
"FTX CEO Sam Bankman-Fried poured millions of dollars into political races and lobbying costs this year, becoming crypto’s best-known voice in the world of Washington policymaking. But minutes after the exchange boss made the shocking decision to sell his company to Binance on Election Day, industry insiders declared that Bankman-Fried’s priority bill was “dead” in Washington — or at least on life support. “It’s dead. Dead, dead, dead, dead,” Messari CEO Ryan Selkis said."
US Authorities Seize $3.36 Billion in Bitcoin From Decade-Old Silk Road Hack (The Block)
"The Department of Justice seized over $3.36 billion worth of bitcoin from a hacker who stole 50,000 bitcoin from Silk Road a decade ago. Officials said the action was, at the time, the DOJ's biggest cryptocurrency seizure ever and remains the second-largest of any kind in its history. James Zhong pleaded guilty before a Manhattan court to wire fraud over his hack of 50,676 BTC from the Silk Road back in 2012. The Silk Road was the first major darknet marketplace, allowing merchants to sell often-illegal wares in exchange for bitcoin. Zhong managed to trick Silk Road's payments processor into giving him the bitcoin via a range of fake accounts."
FTX CEO Sam Bankman-Fried Denies Insolvency Rumors as Binance Liquidates FTT Token (CoinDesk)
"As speculation mounted over the weekend about the solvency of billionaire Sam Bankman-Fried's FTX crypto exchange, the FTX CEO tweeted early Monday morning that "FTX is fine. Assets are fine." "FTX has enough to cover all client holdings," he added. "We don't invest client assets (even in Treasurys). We have been processing all withdrawals, and will continue to be." Last week, CoinDesk published a story revealing the balance sheet of FTX sister company Alameda Research was loaded with FTX's native exchange token FTT. That led to a public war of words between Alameda CEO Caroline Ellison and Binance CEO Changpeng Zhao, also owner of a sizable number of FTT tokens."
LBRY Sold Tokens as Securities, Federal Judge Rules (CoinDesk)
"Crypto startup LBRY violated securities laws by selling its native LBC tokens without registering with the U.S. Securities and Exchange Commission (SEC), a New Hampshire judge ruled on Monday. The SEC sued LBRY in March 2021, alleging that LBC tokens were securities and that the startup had violated securities laws by selling them without registering with the agency. LBRY pushed back, claiming that LBC tokens were not securities, and that the SEC did not give it fair notice that its sale of LBC was subject to securities laws, thus violating the company’s right to due process. The LBRY protocol is a blockchain-based file-sharing network."
BlockFi Brings Back High-Yield Product Thanks to SEC Exemption (The Block)
"BlockFi is bringing back its popular high yield crypto savings account almost nine months after the SEC fined the fintech, thanks to a loophole. And this time it will only target America's wealthiest investors. The firm said only U.S. accredited investor clients – about 13% of households – would be able to earn interest through BlockFi Yield, which offers rates on 15 different cryptocurrencies. The firm described the yields as "competitive." BlockFi is offering the product through an exemption "from the registration requirements of the Securities Act of 1933.""
Bitmex to Launch Trading of Its BMEX Token on Friday (The Block)
"Crypto exchange Bitmex is set to launch trading of its native BMEX token on Nov. 11 after first announcing it last year. Bitmex said on Tuesday that the token will be used to reward customers, as the company aims to regain market share in the derivatives space. Rewards will be offered in the form of trading fee discounts, withdrawal fee waivers, improved staking rewards and access to new products and services, said Bitmex. The exchange first announced the BMEX token in December last year and started airdropping to users in February. Bitmex today said it has airdropped "millions of BMEX to over 80,000 traders" since February. In June, the company delayed the listing of its token, citing "market conditions." But now is the right time to launch, according to Bitmex's chief marketing officer Benjamin Usinger, who said in a statement that the exchange "would like to contribute to growth in liquidity and revitalize the crypto markets.""
Binance to Sell Rest of FTX Token Holdings as Alameda CEO Defends Firm's Financial Condition (CoinDesk)
"Binance’s CEO, responding to a CoinDesk scoop about trading firm Alameda Research’s balance sheet, tweeted Sunday that he will sell the remaining FTT tokens held on his books that he took on as part of his exit from Alameda sister company FTX last year. Binance CEO Changpeng Zhao did not say how much FTT his firm will sell, but that as part of the cryptocurrency exchange’s exit from FTX equity last year, Binance received roughly $2.1 billion worth in the form of BUSD (Binance's stablecoin) and FTT."
Google Cloud Adding Bigquery Support for Solana in Q1 2023 (The Block)
"Google Cloud is adding support for the Solana blockchain in BigQuery, in order to make it easier to access Solana data. This comes nine years after it first added Bitcoin to the service. Support for Solana will go live in Q1 2023, according to Nalin Mittal, web3 lead for Google Cloud, speaking at Breakpoint, Lisbon. Google Cloud is already running a Solana validator, Mittal said. It is learning more about the blockchain by doing this and working out how to run one in a cost-efficient way."
Crypto Trading Firm Amber Seeks $100 Million in Fresh Funding at ‘Flat’ Valuation (Bloomberg)
"The crypto market downturn has served as a major reality check for startups looking to secure new cash. Digital-asset trading platform Amber Group is in the process of raising a little over $100 million in fresh funding at a $3 billion valuation, according to a person familiar with the matter. The Singapore-based startup had the same valuation in its most recent $200 million fundraise in February, which included Temasek Holdings Pte and Tiger Global Management as investors."
Open Interest in FTT Futures Doubles as Binance Moves to Liquidate FTX Token Holdings (CoinDesk)
"Traders are scurrying to hedge against a potential slide in crypto exchange FTX's native token, FTT, in the wake of Binance's decision to liquidate FTT holdings and controversy surrounding Alameda's balance sheet. Open interest, or the dollar amount dedicated to futures and perpetual futures tied to FTT, has more than doubled from $87.56 million to $203 million since early Asian hours, reaching a 12-month high, according to CoinGlass. The funding rate, or the cost of holding bullish long positions or bearish short positions, has dropped sharply to an annualized -36%, per data provided by Matrixport Technologies. A negative funding rate implies shorts or bears have the upper hand and are willing to pay funding to longs to keep their positions open."
OpenSea Creates Tool to Help NFT Collections Enforce Royalties On-Chain (The Block)
"Marketplace giant OpenSea laid out the first of a suite of tools for its users this weekend, allowing creators of new NFT collections to enforce royalties on-chain. Debuting on Nov. 8, the company said it wants to "take a thoughtful, principled approach to this topic," following a protracted debate among players in the market about the correct course of action on enforcing payments to creators. The code to which it is giving creators access restricts NFT sales to marketplaces that enforce creator fees."