Bitcoin Rises Briefly as Fed Chair Promises More Rate Hikes

 The Federal Reserve may have to keep rate hikes going for longer than previously expected. 

Jerome Powell – Chairman of the Federal Reserve – recently spoke about the future of macroeconomic policy and U.S. inflation at the Brooking Institution.

As is typical, Bitcoin’s price was affected by his comments, rising by 1% just as his speech began. 

As of 18:13 UDT on Wednesday, Bitcoin traded for $16,780.

The price then shot up to $16,850 at 18:30, when he began to speak. By 18:40, the leading crypto asset traded for $16,960.

Over the past 3 months, the Federal Reserve has raised its benchmark interest rate in intervals of 75 basis points at a time. The current rate, according to Federal Reserve data, is 3.83%. 

Before the speech, Powell was expected to reinforce his message supporting continued interest rate hikes, which would slow to 50 basis points starting in December. On Wednesday, his message was even more hawkish:

“We anticipate that ongoing increases will be appropriate,” he stated. “It seems to me likely that the ultimate level of rates will need to be somewhat higher than thought at the time of the September meeting, and the summer of economic projections.”

Powell noted that the path forward for inflation remains “highly uncertain,” and that there would be “more ground to cover” in this regard. 

CPI inflation clocked in at 7.7% as of October, beating economists’ expectations at the time.

FTX Hacker Transfers $4.1 Million in Bitcoin to OKX

The FTX hacker appears to have moved some of the stolen bridged assets to OKX. 

On-chain sleuth ZackXBT has tracked down some of the mixed Bitcoin funds stolen by the mysterious FTX hacker this month. 

The analyst found that $4.1 million worth of Bitcoin (255 BTC) has ended up on OKX, a cryptocurrency exchange. 

As explained on Twitter, the hacker initially deposited the stolen funds to CoinMixer – an anonymous Bitcoin mixing service designed to make on-chain Bitcoin transfers harder to track. 

The first CoinMixer deposit was made on November 20th after the attacker used Ren Bridge to move assets from Ethereum’s blockchain to Bitcoin’s. As of Tuesday, there is $7 million in ETH remaining on the address. 

After examining the deposits, ZackXBT said that the hacker had likely transferred those funds to OKX, after withdrawing from the mixer. 

“So far we’ve accounted for at least $4.1m (255 BTC) sent to OKX,” he said.

 The analyst further elaborated that 50% of funds were “peeled off” post CoinMixer withdrawal, as another 50% were sent to OKX. 

The FTX hacker drained over $400 million in funds from the exchange just hours after it declared bankruptcy on November 11th. It has since commenced numerous swaps and bridge transfers obscuring the trail of the funds. 

At one point, the exploiter’s address became the 35th largest holder of ETH, though the attacker’s identity remains unknown. 

Bahamian regulators claimed earlier this month that they were the ones behind the hack, having directed the transfer of funds to its own wallet for “safekeeping.” However, some suspect that this could be an inside job.  

WBTC Depegs From BTC: The Fear Is Real

 Bitcoin-backed Wrapped Bitcoin (WBTC) tokens have been trading at a discount compared to their Bitcoin backing ever since the fall of major crypto exchange FTX.

Market data provided by Done shows that Wrapped Bitcoin has been consistently trading at a discount compared to the value of the underlying Bitcoin ever since the fall of major crypto exchange FTX. WBTC’s price broke under the full value of a Bitcoin on Nov. 12 and its value compared to Bitcoin has seen a sharp increase in volatility ever since.

WBTC has reached its peak discount compared to Bitcoin on Nov. 26, when it was worth nearly 1% less than Bitcoin despite its supposed one-to-one BTC backing. As of press time, WBTC is trading at a 0.19% discount compared to the underlying Bitcoin.

One possible reason for this discount is that the fall of FTX generated a significant — and healthy — degree of distrust towards custodial solutions that resulted in a significant increase in the WBTC selling pressure. This idea is further backed by Messari data showing an 8.82% decrease in WBTC supply from 238,000 on Nov. 12 down to 217,000 as of press time.

Looking at more data shows that the role of FTX’s bankruptcy — which also brought down its sister investment firm Alameda Research down with it — is much more direct than just causing panic. Dune data shows that Alameda research is both the top WBTC minter and burner, meaning that the bankrupt institution created more and destroyed more Wrapped Bitcoin than any other entity.

Alameda Research minted 101,746 WBTC and burned 29,435 WBTC to withdraw the underlying BTC — exercising negative market pressure on both WBTC and Bitcoin. Furthermore, Alameda Research also has 72,310 WBTC to burn and — consequently — Bitcoin to sell while trying to recover assets to pay off its creditors.

Mitsubishi Logistics creates blockchain tracker for delivery

Mitsubishi Logistics has harnessed the power of blockchain to allow its clients to track their shipments to ensure that outsourced pharmaceutical shipments are kept in proper conditions throughout. 

Mitsubishi launches ML Chain System to streamline pharmaceutical drugs distribution

Mitsubishi has developed the ML Chain blockchain system to help streamline the transport of drugs.  Through this technology, its clients can even view the temperature of shipments when they change hands and other crucial details.

The new ML Chain can track shipments from pharmaceutical manufacturing plants and logistics centers to distributors. Takeda Pharmaceutical is already utilizing it in Japan for some of its goods.

The motors company has seen that via blockchain technology can help in the transmission of tamper-proof data globally and decided to leverage it. Its new distributed ledger technology foreshadows more applications of blockchain technology to expect in the near future.

More to the story

In the future, Mitsubishi Logistics also wants to broaden ML Chain to include shipments across international borders and delivery from wholesalers to pharmacies and hospitals. It considers the platform a precaution against counterfeit medications and a way to assist with quality control and inventory management.

In addition, the Mitsubishi group firm will think about utilizing ML Chain to aid in developing new, secure direct-to-consumer distribution channels. It will assess data gathered via the platform to enhance supply chains.

To ensure that medications are transported safely and effectively, authorities worldwide call for stronger regulations. 2018 saw the adoption of GDP guidelines by the Japanese government. With the introduction of COVID-19, there is a greater need than ever for the safe carriage of medications and vaccines.

Mitsubishi Logistics finished a medical product distribution facility in the city of Ibaraki, which is close to Osaka, by the end of October. The company announced this month that it would develop its GDP-compliant service architecture for delivering medicinal items at room temperature. It will enhance the number of places served by expanding its fleet of delivery vehicles.

According to the Yano Research Institute, the market for logistics outsourcing services for the industries producing pharmaceuticals and medical equipment reached 110 billion yen ($778 million) in fiscal 2020, an increase of 3.8% from the previous year. There is an increasing trend to choose distributors based on their quality-control systems as the number of pharmaceuticals supplied and the rate of outsourcing to distribution firms increase. 

Tezos Foundation partners with Unity to expand Web3 gaming reach

 The Tezos Foundation has announced a professional services agreement with game engine developer, Unity. The strategic partnership with Unity’s Accelerate Solutions will see to the development of a Web3 Blockchain SDK for games and dApps, according to a press release on November 25, 2022.

Tezos (XTZ) x Unity join forces 

While the crypto winter of 2022 has continued to hit Bitcoin (BTC) and other cryptocurrencies hard, Web3 gaming has continued to see increased adoption, and now, the Tezos Foundation is joining forces with Unity, a leading game engine developer, to bring the next wave of users into Web3 gaming and more.

Per a press release by the team, the energy-efficient Tezos blockchain signed professional services deal with Unity’s Accelerate Solutions group earlier in May 2022, for the creation of a new Web3 blockchain software development kit (SDK).

If approved, the Tezos Foundation and Tezos Ecosystem teams plan to offer the Web3 Blockchain SDK as a Verified Solution and an optional Web3 game development plug-in via the Unity Asset Store.

Cross Platform Availability 

Notably, the team has made it clear that the new Tezos Web3 blockchain SDK will be available across all platforms, including Desktop computers, Android and iOS devices, and Web browsers.

In addition to enabling Unity developers to build Web3 games, the SDK will also support the development of decentralized applications (dApps) on the energy-efficient proof-of-stake (PoS) based Tezos blockchain. 

Commenting on the Tzos-Unity alliance, Jermy Foo, Global Head of Gaming at TriliTech, a Tezos-focused blockchain research and development hub said:

“We are thrilled to see the creation of a Tezos SDK in collaboration with Unity’s Professional Services team, bringing the option of Web3 gaming to the most popular game development platform. This is the first comprehensive blockchain SDK co-developed with Unity, providing game developers with an easy-to-use, complete solution for adding a wide range of Web3 features that will make the game more fun for gamers.”

Thanks to its low carbon footprint, the Tezos blockchain has seen increased adoption by a vast array of leading brands in the real world of late, including popular American pizza restaurants, Papa John’s, English Premier League giant, Manchester United, and a host of others.

At the time of writing, the price of Tezos’ native XTZ token is hovering around $0.97, with a market cap of $892.85 million, according to CoinMarketCap.

BlockFi Files for Bankruptcy Following FTX Crash

 It almost seemed inevitable following everything that happened with FTX.

Another former cryptocurrency giant has filed for Chapter 11 bankruptcy protection in the United States.

Thus, BlockFi has followed the example of companies like Celsius and Three Arrows Capital.

The cryptocurrency lender’s troubles began as the bear market intensified earlier this year, especially after the Terra collapse.

There seemed to be a lifeboat thrown by FTX a few months down the road as the exchange provided a $400 million loan to BlockFi and had the option to purchase the company for up to $240 later on.

However, the once SBF-led giant crashed spectacularly earlier this month, which led to a new wave of problems.

Some reports emerged claiming that BlockFi was exploring filing for bankruptcy, but company reps refuted them at first.

Yet, the crypto lender has indeed filed for Chapter 11 bankruptcy protection in a New Jersey court, as reported by CNBC.

The filing reads that BlockFi had over 100,000 creditors and its liabilities were somewhere between $1 billion and $10 billion.

“We do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US.” – a company spokesman had previously said.

This year has already seen its fair share of bankruptcy filings in the crypto industry. Celsius was among the first, followed by 3AC, Voyager, and more.

Andre Cronje on What’s it Like to be a Crypto Company

 Fantom was forced to become extremely frugal during the 2018 bear market, but later recovered using decentralized finance. 

Andre Cronje – the so-called “Vice President of Memes” for the Fantom Foundation – provided an insider’s view into how the company has remained cash-flow positive across the past 4 years. 

The developer noted that the foundation would “likely not be operational today” without decentralized finance (DeFi), and suspects the same is true for other firms. 

Scaling Over One Cycle

As explained in a blog post from Cronje on Sunday, Fantom ended 2018 with a fairly unprofitable ETH trade. After raising $40,000,000 worth of the cryptocurrency in June, it sold those holding after a major price correction leading up to December. At this point, the firm had less than $5 million remaining. 

This forced the company to become extremely frugal over the following year, while periodically selling some of its native FTM tokens to fund unplanned expenses. Its primary costs during this time were related to paying off listing fees to exchanges and sponsorship fees to influencers. 

“We decide[d] to never pay for exchange listings or influencers again,” wrote Cronje. 

Starting in February 2020, Fantom began “aggressively” participating in DeFi, using its profits to purchase FTM off the market. By March, the company was already earning 20% APY on $3  million in funds, making for $600,000 per year. Combined with yield farming later that year on both Compound (COMP) and Synthetix (SNX), the foundation brought its treasury holdings back to $51 million by the start of 2021. 

The firm later sold $35 million worth of FTM to the now-bankrupt Alameda Research, and another $5 million of the asset to Blocktower. It denied Alameda’s requests for further cooperation going forwards. 

By October 2022, the firm held $100 million in stablecoins, $100 million in crypto assets, and $50 million in non-crypto assets. 

Like Fantom, many crypto firms were forced to downsize when the bear market returned in 2022. Coinbase slashed 18% of its workforce, while BitMEX laid off 30%.

Lessons Learned

According to Cronje, businesses shouldn’t try to compete with others for token listings on exchanges.  “We prefer buying our token, we don’t “sell” our tokens for “partnerships,” he said. 

“Blockchain companies, realistically, only make money by selling their token,” Cronje added. “These are finite models.”

Rather, the foundation took an approach of focusing on “infinite” models, including how given partnerships or project launches might affect the company ten years down the line. 

“If your entire revenue model is selling your token, you are doing a disservice to yourself, your blockchain, and your supporters,” he concluded. 

Earlier this month, both FTT and SRM collapsed by 90% and 60% respectively after FTX filed for bankruptcy. The firm has been highly criticized for heavily relying on each of these tokens, which once accounted for billions of dollars on its balance sheet.

El Salvador Launches a National Bitcoin Office (ONBTC)

 The “specialized administrative unit” ONBTC will coordinate and consult all bitcoin projects in El Salvador.

El Salvador’s government doubled down on its crypto initiatives by creating a National Bitcoin Office (ONBTC) that will oversee all local projects related to the asset.

The new agency will also be able to cooperate with other countries in matters associated with BTC.

Enter ONBTC

Despite the prolonged bear market, El Salvador’s authorities seem determined to advance their bitcoin strategy. According to a recent LinkedIn post, the government created a National Bitcoin Office that will function as a “specialized administrative unit, with functional and technical autonomy within the Presidency of the Republic.”

The agency will have all the freedom to manage and consult domestic bitcoin projects and join forces with other countries’ organizations on initiatives linked to the leading digital currency:

“The objective of the ONBTC will be to design, diagnose, plan, program, coordinate, follow up, measure, analyze and evaluate plans, programs, and projects related to bitcoin for the economic development of the country.”

The entity will analyze all individuals who wish to meet the BTC-loving President Nayib Bukele to discuss the nation’s blockchain path.

It will also work closely with the different Ministries to formulate adequate regulations on the local crypto sector and introduce educational programs for Salvadorans.

“All public institutions shall collaborate with the ONBTC for the fulfillment of its functions and objectives. For example, the Ministry of Foreign Affairs will collaborate in cases of international cooperation, while the autonomous and municipalities may do so to the extent that their regulations allow,” the post reads.

President Bukele will hire the Director of the agency, while the latter will appoint all necessary personnel according to his understanding.

Focus on the Entire Crypto Sector

The government presented a bill earlier this week aiming to establish regulations on the local crypto industry by forming a designated commission.

Up until recently, El Salvador’s main focus was on bitcoin. The nation made history last year by becoming the first to embrace the coin as a legal tender inside its borders. It announced plans to create a Bitcoin City and built a massive vet hospital using profits from its BTC purchases.

The latest data reveals that the Central American country holds 2,381 BTC, equaling nearly $40 million (calculated at current prices). President Bukele, though, disclosed that the government will start buying one bitcoin a day starting November 18, meaning the possessions could have increased by now.

Crypto Firm Spent $600,000 to Create a Half-Elon Musk, Half-Goat Statue

 The creators are about to deliver the bizarre statue to Musk’s house in Texas on Saturday (November 26)

The cryptocurrency company EGT (which stands for Elon GOAT Token) built an interesting monument of Elon Musk. The statue represents a creature with a goat’s body and the entrepreneur’s head stuck on it that is about to shoot into space on a rocket.

The firm plans to deliver the item to Musk’s home in Austin, Texas, on November 26 and invited people to attend the claim of this “historical gift.”

Musk Put on a Pedestal

Twitter’s new owner and the world’s richest man – Elon Musk – is one of the most influential figures of our time, and people often pay attention to his words, even when he talks about crypto.

The digital asset firm – EGT – took that affection to another level by creating a bizarre statue of the South African. His 6-foot-tall head is placed upon a 30-foot-long body of a goat while the creature sits on a rocket that is about to head to “the moon.”

The developers spent $600,000 to fulfill the project and want to give it to Elon Musk as a gift so he could “catapult” the EGT token “into the limelight and accelerate its various initiatives.” The company has even created a countdown clock showing it will deliver the item to the South African’s residence in Austin, Texas, on Saturday (November 26).

Musk's statue

Musk’s Statue, Source: Daily Mail

The Canadian subsidiary of Tesla – Drive Tesla Canada – thinks the acceptance of the present will be a “global spectacle” that could go viral beyond crypto and into mainstream media.

Jeff Hoffman – the Chairman of EGT’s Advisory Board – said the creators of the monument sought to “celebrate the existence of the most innovative man of the 21st century.”

“The idea behind this statue is to capture the greatest transfer of wealth in its entire history. The creators of the cryptocurrency want it to make it memorable and save time just like it has been done in history, statues have been built to capture the moments,” he added.

Musk Can Affect the Market

Trying to convince Musk to boost the development of EGT’s token does not lack logic since the billionaire has proven he can influence the market.

In a series of tweets last July, he spoke about a mysterious cryptocurrency called Baby Doge Coin. The coin’s price skyrocketed by 90% hours after his Twitter engagements.

Last Christmas, Musk dressed his dog (called Floki) in a Santa Claus outfit and posted a picture on the social media platform. Creative crypto participants were quick to react and introduced a new token going by the name Santa Floki (with the ticker HOHOHO). The asset soared over 18,000% in the following days.

Musk is famous for his affection toward the first-ever memecoin Dogecoin and often praises its merits. His interaction with the token last year, specifically the numerous endorsements on Twitter, was one of the reasons DOGE reached an all-time high of nearly $0.75. The ongoing bear market, though, has cooled off the price expansion, and it currently trades at around $0.08.

MakerDAO Disposes of renBTC as Stablecoin Collateral

 The Alameda-linked tokenized Bitcoin asset will no longer be used to back DAI. 

MakerDAO – the issuer of the decentralized stablecoin DAI – unanimously passed a proposal this week to remove renBTC as a form of reserve collateral. 

The Bitcoin-pegged token was deemed too risky to hold exposure to in light of its connections to the now-bankrupt trading desk Alameda Research. 

Alameda and Ren

As announced by MakerDAO over Twitter on Thursday, Maker’s governance voted to offboard the RENBTC-A Vault type in a governance poll that opened on Monday.

Nearly 75,000 votes were in favor of the motion, with 0 abstaining or objecting. 

“Considering the acquisition of the Ren project by Alameda Research and the recent bankruptcy of the latter, the Ren development team disabled the Ren network mints,” said Maker. Ren 1.0 network, it said, will shut down within 30 days after November 18th. 

Ren is a bridge protocol for transferring digital assets to other blockchains (ex. transferring BTC to Ethereum). Facilitating such bridges requires a trusted third party to hold organic BTC in reserves, such that the bridge token (renBTC) is always redeemable with BTC 1:1. This allows the price of the bridge token to consistently track that of the base asset. 

Stablecoins work in much the same way, with organizations like Tether and Circle holding billions in cash and U.S. Treasuries to back their dollar equivalent tokens. Both organizations release periodic attestations affirming the status of their reserves. 

By contrast, MakerDAO backs its DAI stablecoin through a basket of cryptocurrencies like USDC, ETH, renBTC, and others. 

Ren was acquired by Alameda Research earlier this year and has since received quarterly funding from the firm. After the trading desk filed for bankruptcy, Ren announced last week that it would disable its previous Ren 1.0 tokenized Bitcoin offering in favor of a new, community-controlled “Ren 2.0” faster than previously planned. 

The team clarified that Ren 1.0 “remained and still remains fully safe and operational.” According to CoinGecko, the asset is still price pegged to BTC, trading at $16,600 at writing time. 

“Marking this event as the end of Alameda’s involvement in the project by sunsetting Ren 1.0, safeguards the reputation, integrity, and hence long-term prospects of the Ren ecosystem,” said Ren in its statement last Friday. 

Risks to Ren?

Despite renBTC’s current stability, Maker’s Risk Core Unit stated that the DAO’s offboarding of the asset could itself cause it to de-peg from Bitcoin. “Disabling burns means that Maker has a limited time frame to offboard the collateral to minimize potential future complications,” explained Maker. 

The organization added that its offboarding from RENBTC-A  “doesn’t represent any threat or deficiency to the Maker Protocol’s financial health, nor to its solvency.”

Another FTX-linked Bitcoin asset – soBTC – has already dropped 90% in value after FTX disabled withdrawals earlier this month. The exchange was responsible for holding the Bitcoin backing those tokens, but was exposed as having zero Bitcoin on its balance sheet as of November 10th.

Crypto Lender Hodlnaut Investigated by Singaporean Authorities

Hodlnaut’s directors might have defrauded clients, the Singaporean police claimed.

Law enforcement agents in Singapore have reportedly opened an investigation against the troubled crypto lender Hodlnaut. 

The police suspect the company’s executives might have cheated users over the years and committed other crimes.

According to a Bloomberg coverage, Singapore’s police force started probing Hodlnaut for its alleged involvement in cheating and fraud offenses. This comes as a result of numerous reports which blamed the firm’s directors for having made “false representations relating to the company’s exposure to a certain digital token.”

“If you have deposited digital tokens with Hodlnaut and believe that you may have been defrauded through, among others, false representations made by Hodlnaut, you may wish to lodge a police report at the nearest Neighbourhood Police Centre or online,” the police outlined.

The Singaporean-based cryptocurrency lender halted withdrawals, deposits, and token swaps in August, citing “difficult market conditions.” It dismissed approximately 80% of its workforce and reduced its interest rates nearly a week after suspending services.

Hodlnaut filed to be placed under judicial management with the Singapore High Court, hoping it could “rehabilitate” its business and prevent a forced liquidation of its assets:

“The judicial management application provides a moratorium (or temporary pause) against legal claims and proceedings against Hodlnaut. This pause will provide us with the breathing space to focus our efforts on the recovery plan to rehabilitate the company.”

The authorities approved the request and appointed Rajagopalan Seshadri, Paresh Jotangia, and Ho May Kee as the firm’s interim judicial managers.

The Exposure to Terra’s UST

As CryptoPotato recently reported, Hodlnaut was among the victims of the colossal Terra crash in May this year. The company lost $190 million due to its exposure to the algorithmic stablecoin UST. 

“It appears that the directors had downplayed the extent of the group’s exposure to Terra/Luna both during the period leading up to and following the Terra/Luna collapse in May 2022.”

The crypto lender appears to have been hiding the facts from its users. Bloomberg’s data revealed that some of the company’s employees deleted over 1,000 “key” documents that could have shown the exposure.

Terra’s native token – LUNA – and its stablecoin – UST – plunged to virtually zero causing huge panic among investors and distress in the entire market. Multiple sources disclosed that some people had even committed suicide due to their multi-million losses. 

10,000 BTC tied to Mt Gox Hack Moved After 7 Years

 It is worth noting that funds have not moved from the now-defunct Mt.Gox exchange’s cold wallets since 2018.

A crypto wallet attributed to the failed BTC-e linked to the 2014 Mt. Gox hack moved 10,000 Bitcoin, now worth over $165 million, to a group of personal wallets, exchanges, and other services on November 23rd.

A report by Chainalysis suggested that the funds’ movement marks the largest withdrawal by the Russia-focused cryptocurrency exchange – BTC-e’s controllers. The US authorities ceased its operations in 2017 due to its role in laundering funds associated with other forms of cybercrime, including crypto stolen in the 2014 Mt. Gox exchange hack.

BTC-e and another exchange called WEX, believed to be the successor entity, sent small amounts of Bitcoin to a Russian electronic payments platform – Webmoney – on October 26th. Over two weeks later, BTC-e conducted a test payment out of its wallet before moving nearly 100 Bitcoin indirectly to an exchange on November 21.

According to the blockchain analysis company, around 9.950 BTC are currently being held in personal wallets of the total sent in the last several days. The rest of the funds were found to have been moved through a series of intermediaries to four deposit addresses at two large exchanges.

Chainalysis believes a Russian exchange may have acted as an intermediary to launder this BTC-e money.

Blockchain analytics firm CryptoQuant co-founder and CEO Ki Young Ju also confirmed the illicit transfer of funds. He also added that 65 BTC was moved to HitBTC and advised the crypto exchange to suspend the account.

For the uninitiated, BTC-e was shut down, and its funds were seized by the Federal Bureau of Investigation (FBI) in 2017. Despite this, it still held a significant amount of Bitcoin. A year later, it transferred more than 30,000 BTC out of its service wallet.

Alexander Vinnik is alleged to be the owner and operator of the BTC-e. The Russian national is also accused of large-scale money laundering through the now-defunct trading platform and other crimes.

Core Scientific warns of 'substantial doubt' to continue operations, posts $435 million loss

 Bitcoin miner Core Scientific will need extra liquidity to keep operations going past November 2023 — and it's facing a steep uphill battle to do so. The miner also posted revenue of $162.6 million in the third quarter, down 0.9% from the previous period. 

The company had already warned that it might run out of cash by the end of the year and that it would not make payments in late October. Core's woes reflect the struggles of the industry, which has faced rising power costs combined with decreased bitcoin prices and higher mining difficulty. Compute North has already filed for bankruptcy, while Argo said it was facing negative cash flow.

FTX Group has cash balance of $1.24 billion, new bankruptcy filing shows

FTX Group, which filed for Chapter 11 bankruptcy protection on Nov. 11, has a combined cash balance of $1.24 billion, according to a new court filing. The latest figures are "substantially higher cash balances than the Debtors were in a position to substantiate as of Wednesday, Nov. 16," it reads.

The cash balances are divided among four silos — the Alameda silo, dotcom silo, ventures silo and West Realm Shires (WRS) silo — and include amounts of both their debtor and no-debtor entities. About $751 million is held in debtor entities and the rest, $488 million, is in non-debtor entities, per the filing. FTX Group collapsed amid a sudden liquidity crisis.

Shiba Inu Army Reaches New Major Milestone in Just 2 Days

According to data shared by WhaleStats platform that track the largest wallets on Ethereum and several other chains, over the past two days, the amount of SHIB holders has become several thousand bigger. The price of the meme coin has remained unaffected, though.

On average, the 100 largest wallets on Ethereum chain hold slightly more than 2 billion SHIB coins. In the meantime, SHIB adoption continues to expand. As reported by U.Today earlier, an Australia-based Shiba Wings diner I expected to open “really soon”. The restaurant is fully crypto integrated thanks to NowPayments crypto gateway and is ready to integrate Shibarium when this long-expected upgrade is ready and gets rolled out.

💰 Solana Bear That SBF Dunked On With $3 Offer Gets the Last Laugh

Back in January 2021, when Solana was a relatively new blockchain network and Sam Bankman-Fried wasn’t quite the mythical crypto figure he’d soon become, the FTX founder publicly antagonized a trader who was bearish on Solana’s prospects.

The tweet became legendary in crypto. But now, following the collapse of FTX and Sam Bankman-Fried's bankruptcy, the tables have turned. On November 11, when Bloomberg estimated SBF’s post-FTX-bankruptcy net worth at just $3, CoinMamba tweeted, “I'll buy everything you have, right now, at $3. Sell me all you want. Then go fuck off.”

MAS Explains Reasons for Not Alerting Local Users About FTX

 The Singaporean regulator explains the difference between Binance and FTX.

The Monetary Authority of Singapore stated that there was no reason to caution investors against FTX crypto exchange as it did with Binance because the former did not actively solicit users in Singapore.

This comes amid earlier speculations stating that the regulator’s action against Binance caused Singaporean users to shift to FTX thereby causing them to be caught in the exchange’s collapse.

FTX Did Not Solicit Singapore Users

In a statement published on Monday (November 21, 2022), MAS responded to “questions and misconceptions” following FTX’s downfall. The Singaporean financial regulator said it was not possible to protect locals who used the Bahamas-based FTX as the crypto exchange was not licensed by the agency and operated offshore.

MAS also addressed concerns about its treatment of the world’s largest crypto exchange Binance, and FTX. The regulatory watchdog said that while both crypto exchanges were unregulated in Singapore, there was a difference between them.

The regulator received several complaints about Binance between January and August 2021, adding that the exchange giant was soliciting Singapore users without having a license. Consequently, MAS placed Binance on the Investor Alert List (IAL). Also, the Commercial Affairs Department (CAD) investigated Binance for possible violation of the Payment Services Act (PSA) on MAS’ referral.

Meanwhile, FTX did not go through the same treatment as its rival because, according to the regulator, it did not specifically solicit users in Singapore and did not conduct trades in the local currency, even though residents could access the Bahamas-based platform online. There was also no evidence that the firm violated the PS Act.

“While both Binance and FTX are not licensed here, there is a clear difference between the two: Binance was actively soliciting users in Singapore while FTX was not. Binance in fact went to the extent of offering listings in Singapore dollars and accepted Singapore-specific payment modes such as PayNow and PayLah.”MAS Repeats Warning About Crypto Risks

MAS also reiterated its warning about the crypto industry, stating that the FTX crisis was an example that engaging in cryptocurrency was risky.

“The ongoing turmoil in the crypto industry serves as a reminder of the huge risks of dealing in cryptocurrencies. As MAS has repeatedly stated, there is no protection for customers who deal in cryptocurrencies. They can lose all their money.”

The collapse of one of the largest crypto exchanges has affected all facets of the industry, both retail and institutional actors. As previously reported by CryptoPotato, court filings revealed that the bankrupt FTX owed over $3 billion to its top 50 creditors.

Gemini Is Working With Genesis to Find Solution for Earn Users

 The report comes as possible bankruptcy looms over Genesis as it struggles to raise fresh capital.

Crypto exchange Gemini revealed working closely with Genesis Trading and its parent company Digital Currency Group, Inc, to find a solution for Earn users to redeem their funds.

In a seris of tweets, the Winklevoss-led platform noted that it is working to provide a material informational update soon.

“This remains our highest priority and we understand Genesis and DCG remain committed to exploring every possible option to fulfill their obligations to Earn users.”

Gemini assured that the turmoil had not impacted any other products and services on its platform and that rest of its operations are working normally.

The Unraveling

The on-chain activity revealed that Genesis had significant interactions with Alameda, Gemini, and BlockFi via their OTC trading desk. FTT was also a top token received and sent in those transactions. However, Genesis is yet to share more information to bring clarity on the extent of the exposure and capital required to make customers whole.

Due to the exposure to the bankrupt FTX and its sister trading firm, Alameda, Genesis Trading – touted as the backbone infrastructure of the institutional investor base for the crypto market – is now scrambling for more liquidity injection. Genesis and its subsidiaries are owned by Barry Silbert’s Digital Currency Group (DCG). Reports suggest it had around $175 million locked in a trading account with FTX.

CryptoPotato reported earlier that the platform sought a $1 billion emergency loan from its investors. But it failed to score the funding, which prompted its decision to suspend withdrawals from its lending arm, citing “abnormal withdrawal requests which have exceeded its current liquidity” on November 16. To keep operations running smoothly, its parent firm, Digital Currency Group, initially poured in $140 million.

In response to Genesis suspending withdrawals, Gemini halted withdrawals from its Earn product, in which the former is a lending partner.

In the Brink of Bankruptcy?

Genesis is now looking to raise more fresh funding for its lending unit from potential investors. However, a failure to do so may push the company to file for bankruptcy, according to a new report. Despite this, a representative of for Genesis told Bloomberg that it has no plans to file for bankruptcy imminently and went on to add,

“Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”

Genesis reportedly aprached Binance for an investment as well as private equity giant Apollo Global Management for support. The CZ-led crypto exchange, however, has turned down the request.

Cardano’s Algorithmic Stablecoin DJED to Launch in January 2023

 The stablecoin will be backed and overcollateralized using solely cryptocurrency, including ADA and SHEN – the smart contract’s reserve token. 

Shahaf Bar-Geffen – CEO of COTI, a stablecoin development company – revealed the launch date for Cardano’s new algorithmic stablecoin at Cardano Summit on Monday. 

After a successful audit, the over-collateralized DJED token will go live in January 2023.

What is DJED?

DJED is Cardano’s attempt to create a price-stable digital asset backed by ADA – the network’s native cryptocurrency. 

By sending ADA to a given smart contract address on Cardano, users will receive the same dollar value worth of DJED in return. Likewise, by sending 1 DJED back to the smart contract, the sender will receive $1 worth of ADA. 

This model could theoretically collapse if ADA were to experience major downside volatility, causing circulating DJED tokens to no longer be fully backed. As such, the smart contract will also include a reserve currency, SHEN, to cover ADA’s price fluctuations, ensure price stability, and guarantee a collateralization rate of 400-800%.

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SHEN holders will be rewarded with fees every time someone exchanges DJED or SHEN for ADA (or vice versa), creating an incentive to hold the token and help maintain the stablecoin peg ratio. 

Unlike DJED, Shen will not be price-pegged, leaving it open to volatility just like ADA. However, the smart contract will prevent anyone from minting new SHEN tokens once the smart contract reaches a maximum threshold, in order not to dilute existing holders. 

Recent market events have proven again that we need a safe haven from volatility, and Djed will serve as this safe haven in the Cardano network,” said Shahaf Bar-Geffen. “Not only do we need a stablecoin, but we need one that is decentralized, and has on-chain proof of reserves.”

Proof of Reserves

“Proof of reserves,” is a growing trend among crypto industry giants in the aftermath of FTX’s fallout, in which the exchange went bankrupt after allegedly misappropriating depositors’ funds for lending activity. This left the exchange unable to satisfy client withdrawals following a bank run earlier this month. 

Rival exchanges including Binance and Bitstamp have agreed to provide blockchain-based proof of reserves to ensure customers that their funds remain safe at all times. Grayscale, however – the owner of the world’s largest Bitcoin fund, GBTC – refused to provide such transparency this weekend, citing “security concerns.”

Reserve transparency is a long-time expectation for stablecoin providers which rely on adequate reserves to satisfy token redemptions at all times. Tether, the issuer of USDT, has faced years of scrutiny over the legitimacy of its $60 billion + reserves but has thus far managed to satisfy redemptions when under stress. 

Organizations like Terra have attempted to design algorithmic stablecoins that remove the requirement for trust in a centralized issuer. However, the ecosystem’s UST and LUNA tokens both collapsed to zero in May, making industry participants and regulators wary of similar models. 

The three top stablecoins – USDT, USDC, and BUSD – are all backed solely by cash and US Treasury bills, per their latest attestation reports

Here’s Why Tim Draper Still Believes Bitcoin Will Reach $250K

 Draper recently shared why he still sees Bitcoin at $250,000 and probably beyond despite the intense crypto winter. 

American billionaire venture capitalist Tim Draper has reiterated his bullish support for Bitcoin despite the crypto winter intensified by the sudden crash of the FTX exchange. 

Draper predicted last June, during the bull market, that the leading crypto asset would reach $250,000 by the end of 2022. However, his prediction is less likely to happen this year since the largest cryptocurrency is now trading below $17,000 following the FTX fiasco. 

Women and Retailers Can Push Bitcoin to $250k

Nonetheless, the billionaire still believes Bitcoin will hit the $250,000 target and probably go beyond once the market recovers and people, especially women, start using the cryptocurrency for daily shopping. 

According to Draper, women control 80% of the total retail spending, which includes clothing, shelter, and food. 

He added that women’s interest in cryptocurrency has also improved. In the past, women controlled 7.14% of Bitcoin wallets, but today, the number has more than doubled to 16.6%. 

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The billionaire investor further outlined another reason that could ultimately push the price of Bitcoin is when merchants start accepting BTC for payments. 

“When women realize they can get a discount by paying in bitcoin or retailers realize they can double their income by accepting bitcoin, it’s going to move pretty quickly,” he said. 

The crypto asset is trading at around $16,000 after reaching nearly $70,000 in 2021. Although it is down more than 75% from its ATH, a growing list of companies worldwide have adopted the cryptocurrency as a payment option, with the latest being the South African supermarket chain Pick n Pay. 

Draper’s Bitcoin Plans

Draper started making the $250,000 Bitcoin prediction in 2020 while describing what the United States would look like if he became president for a day. 

Aside from the forecasts, the billionaire venture capitalist noted that he would explore other aspects of the crypto asset if given a chance. Draper said he would try out a Bitcoin-based universal basic income (UBI) or tax system.

The crypto proponent also stated that he sees Bitcoin as a hedge against bad governance during the just concluded Web Submit 2022. 

Ethereum Dips Below $1200 as FTX Drainer Swaps 5K ETH For Bitcoin

 The FTX account drainer swapped around $6M worth of ETH for wrapped Bitcoin.

Ethereum’s price is trading below $1,200 on Sunday, charting a decrease of around 3.5% in the past 24 hours.

This happens as the FTX account drainer is swapping ETH for wrapped Bitcoin.

• Data from the popular security resource, PeckShield, revealed that the address that drained funds from FTX is swapping ether for BTC.
• The “FTX Account Drainer” dumped around $6 million worth of ETH (around 5K ETH) and bought 357 renBTC.

Source: Twitter

 

• This is causing pressure on ETH’s spot price, which is currently down some 3.5% (on Binance) for the past 24 hours.
• As to who the drainer may be, CryptoPotato recently reported that the Securities Commission of the Bahamas assumed control of associated assets. Per a media release shared by authorities:

On 12 November 2022, the Securities Commission of The Bahamas, in the exercise of its powers as regulator acting under the authority of an Order made by the Supreme Court of The Bahamas, took the action of directing the transfer of all digital assets of FTX Digital Markets to a digital wallet controlled by the Commission, for safekeeping.

Grayscale Says No To Proof of Reserves

 Grayscale said it will not follow the trend and perform a proof of reserves because it would no be the safest thing to do.

The cryptocurrency industry was built on top of one slogan: “don’t trust, verify.” But Grayscale is different from the rest of the cryptocurrency-related businesses.

In a recent Twitter thread pondering the need for transparency in the industry after the collapse of FTX, Grayscale attempted to calm its investors’ fears, assuring them that the regulations that apply to its various entities make an FTX-like scenario nearly impossible.

Grayscale Says: Funds Are Safe, Trust Us

Grayscale assures that each of its products is duly registered as a separate entity with its own regulations. They explain that the laws and regulations governing each of its crypto trusts prevent underlying assets from being sold, loaned, or otherwise transferred.

In a subsequent tweet, Grayscale assures that its cryptocurrencies are held by the custody service provided by Coinbase, the only regulated and publicly traded cryptocurrency exchange in the United States.

But now comes the awkward question. What about proof of reserves? Grayscale declined to do such a thing, citing security reasons. They explain that Coinbase, as custodian, does perform periodic validations, but as such, they would not disclose addresses or any information considered confidential so as not to affect the nature of their products:

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6) Coinbase frequently performs on-chain validation. Due to security concerns, we do not make such on-chain wallet information and confirmation information publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure.

— Grayscale (@Grayscale) November 18, 2022

Does Proof of Reserves Really Matter?

The Proof of Reserves is simply a way for users to prove that an independent auditor studied and proved the reserves of a specific exchange or business. It uses Merkle Trees to capture data and get a set of fingerprints that let users verify that their funds were properly audited by a third party.

The proposition for proof of reserves has started to get a lot of buzz in the cryptocurrency community in the wake of the FTX meltdown, the latest victim of a cryptocurrency winter that has taken down industry heavyweights such as Terra, 3AC, and Celsius.

The idea is to provide a way for users to verify a business’s assets via cryptographic techniques that ensure data transparency. Binance recently agreed to work alongside Vitalik Buterin to implement a new proof-of-reserves protocol that is supposed to be more efficient and secure than the current methods.

However, Grayscale is adamant that some things should be kept secret.

7) We know the preceding point in particular will be a disappointment to some, but panic sparked by others is not a good enough reason to circumvent complex security arrangements that have kept our investors’ assets safe for years.

— Grayscale (@Grayscale) November 18, 2022

Grayscale currently holds the largest cryptocurrency trust in the industry, to the point where it was considered the best way to get exposure to the cryptocurrency market among institutional clients. However, following the crypto winter, each share of the trust has traded about 40% below the price of BTC as an underlying asset.

Grayscale has also tried to convert its trust into a Bitcoin ETF, but the SEC has not given the thumbs up for the project to continue.

Saint Kitts and Nevis to Make Bitcoin Cash Legal Tender in 2023

 The Prime Minister Terrance said Saint Kitts and Nevis will engage with Bitcoin Cash mining and make BCH legal tender by March 2023.

The island country located in the Caribbean region – Saint Kitts and Nevis – plans to turn Bitcoin Cash (BCH) into an official payment method inside its borders by March next year.

The announcement positively affected the asset’s price, which jumped above $100.

• The Prime Minister of Saint Kitts and Nevis – Terrance Micheal Drew – disclosed that the government is willing to engage with Bitcoin Cash mining and make the asset legal tender on local soil by March 2023.
• The leader opined that the cryptocurrency represents “future opportunities” and said the initiative will go live once regulators guarantee consumers will have maximum protection.

• BCH jumped to around $103 immediately following the speech and still trades above $100. Still, this is far away from the 2021 price levels when it surpassed $1,500. The all-time high occurred in 2017 when it traded at over $4,300.
• Bitcoin is the only digital asset that currently serves as legal tender. The first country to embrace it was El Salvador in 2021.
• The Central African Republic followed suit this year. The President of the nation – Faustin-Archange Touadéra – argued that “bitcoin’s “disruptive power” will bring “long-term prosperity.” He also urged people to understand the benefits of the asset as it could serve as a lifeboat during the ongoing adverse economic times.

Binance Has No Big Plans for India Due to High Taxation, Says CZ

 

Early this month, the Binance CEO said at Singapore Fintech Festival that high taxes can kill the crypto industry in India.

Binance CEO Changpeng Zhao (CZ) has all but given up on India. Pointing out the 1% transaction tax that came into force on 1 July 2022, CZ said it makes crypto trading unviable in India.

Speaking at the TechCrunch Session: Crypto 2022 on November 17 in Miami, CZ further pointed out that Binance is engaged with blockchain associations and influential persons in India to present the industry’s stance before the policymakers, a TechCrunch report said.

CZ Red Flags 1% Transaction Tax

“If you are going to tax 1% on each transaction, there is not going to be that many transactions… To be honest, I don’t think India is a very crypto-friendly environment,” he said.

While CZ maintained his negative outlook on India, first publicly expressed during the Singapore Fintech Festival early this month, Binance is available to Indian users.

“A user could trade 50 times a day, and they will lose like 70% of their money. There is not going to be any volume for an order book type of exchange. So we don’t see a viable business in India today,” he explained.

Indian exchanges have witnessed up to a 90% fall in trading volume after the transaction tax on crypto activities became effective in July.

Binance Sees Spurt in Indian Traders 

The 1% transaction tax on crypto activities became effective on 1 July 2022. And, Binance seems to be a major gainer as traders have deserted Indian exchanges for fear of tax reporting and compliance and thronged to foreign exchanges, including Binance, which is yet to take a call on compliance with new taxes.

The Binance app witnessed 429,000 downloads in August in India, the highest for the year, and over three times more than the runner-up, CoinDCX, media reports said in early September.

“Binance goes to countries where regulations are pro-crypto and pro-business. We don’t go to countries where we won’t have a sustainable business — or any business, regardless of whether or not we go,” he told the panel at the opening session of TechCrunch’s first dedicated event on crypto.

CZ has Not Given Up Entirely 

But the Binance CEO has not completely removed India from his scheme of things.

“We just have to wait. We are in conversation with a number of industry associations and influential people and trying to put some logic there… We are trying to get this message across, but tax policies typically take a long time to change,” Zhao cautioned.

Revolut Distances Itself from FTX While Pushing for Crypto: Report

 Several crypto firms have been affected by the fiasco and many of them are now revealing their exposure to it.

After Sam Bankman-Fried’s crypto empire imploded last week, exchanges are rushing to soothe the nerves of infuriated investors. Digital banking firm, Revolut is the latest one to distance itself from FTX.

In an emailed statement, Revolut told users that it did not have “material exposure” to the bankrupt crypto exchange.

Revolut Monitoring the Situation

The London-based company said it is still monitoring the situation while reminding the volatility associated with digital assets.

“This is a good reminder that crypto is very volatile: the value does go down, as well as up. So, remember to only invest what you can afford to lose.”

It is important to note that the FTX chief tweeted that users could transfer money in fiat currencies between his exchange and Revolut in June last year. Despite this, the latter’s spokesperson has confirmed that the company does not have any direct exposure to FTX.com or its sister trading firm Alameda Research. Additionally, Revolut has very little indirect exposure and does not allow trading in FTX’s native – FTT token.

Other platforms, such as Robinhood Markets, have also confirmed having no direct exposure to FTX. In fact, its Chief Executive Officer Vlad Tenev claimed that customers were turning to the trading app in a “flight to safety” after the collapse.

A NY-based investing company, Public, notified its members this week, assuring that it does not have “any direct exposure” to FTX, Alameda, or FTT. Stephen Sikes, Public’s chief operating officer, went on to assert that customers did not have access to FTT on their platform since it was not listed by US-based firms.

Legal Woes for FTX

FTX is currently battling bankruptcy with an $8 billion deficit in its financial records. This week, the court-appointed Bahamian liquidators claimed signs of “serious fraud and mismanagement” on the bankrupt crypto exchange’s part. Brian Simms, the provisional liquidator, questioned the validity of a Chapter 11 bankruptcy filing by subsidiary FTX Trading and the collective 130 affiliates in Delaware court.

The high-profile collapse will undoubtedly trigger several criminal and civil actions against FTX as well as its executives, such as Bankman-Fried. Furthermore, regulators across the world are also expected to double down their initiatives on crypto regulation.