Month: January 2023

Crypto Markets Surge, Genesis Files for Chapter 11 Bankruptcy

• Bitcoin surged 6% to trade at $22,300 while Ether was up 5% to $1,640.
• Crypto lending firm Genesis held $5.1 billion in liabilities in the weeks following its freeze on withdrawals in November.
• Genesis became the latest crypto firm caught up in the immediate fallout of FTX’s implosion, with three of its entities filing for Chapter 11 bankruptcy protection.

Cryptocurrency markets were burning red hot on Wednesday, with Bitcoin surging 6% to trade at $22,300. Ether was also trading up, by 5% to $1,640, while equities closed up.

The surge in activity came as crypto lending firm Genesis held $5.1 billion in liabilities in the weeks following its freeze on withdrawals in November. According to bankruptcy court documents signed by interim CEO Derar Islim, the run on the bank that followed the collapse of sister companies FTX and Alameda caused customers to demand Genesis repay $827 million in loans, leading the firm to freeze withdrawals.

In a first-day motion in the U.S. Bankruptcy Court for the Southern District of New York, Islim provided a breakdown of Genesis’ financial state heading into its restructuring. Genesis became the latest crypto firm caught up in the immediate fallout of FTX’s implosion, with three of its entities – Genesis HoldCo, Genesis Global Capital LLC and Genesis Asia Pacific PTE. LTD – filing for Chapter 11 bankruptcy protection late Thursday.

The filing came after a tumultuous few months for the firm, which froze loan repayments in November, citing liquidity issues. This caused a massive run on the bank, with customers demanding their funds back. The situation was further complicated by Genesis’ sudden closure of its Hong Kong offices in December, followed by its UK office in January.

Genesis had been one of the world’s largest crypto lenders, with an estimated $5 billion in loans outstanding. But the firm has been struggling since the pandemic began, with its customers increasingly becoming unable to repay their loans.

The filing is the latest sign of trouble in the crypto markets. Last month, FTX imploded, sparking a massive sell-off in the crypto markets as investors pulled their funds out of the exchange. The situation was further complicated after the US SEC accused FTX of running a fraudulent securities offering.

The market volatility and turmoil have put a spotlight on the risks associated with investing in crypto and digital assets. The SEC and other regulators have warned investors to be wary of the risks involved and to do their due diligence before investing in any crypto-related products.

The turmoil also serves as a reminder that, while crypto has seen a meteoric rise in recent months, it is still a nascent asset class with many unknowns. Investors should approach crypto with caution, being sure to diversify their portfolios and manage their risk levels accordingly.

Grayscale Slams SEC for Rejecting Bitcoin ETF: Illogical and Fundamentally Unreasonable

• Grayscale, a digital asset management company, has criticized the SEC for their “illogical” and “fundamentally unreasonable” decision to reject a spot bitcoin ETF.
• Grayscale argues that the SEC’s rationale for the rejection is flawed and not based on market data.
• Grayscale’s Bitcoin Trust is up 17.5% for the year and has more than $10 billion in assets under management.

Digital asset management company Grayscale Investments has made a strong case against the U.S. Securities and Exchange Commission’s (SEC) recent decision to reject a spot bitcoin exchange-traded fund (ETF). In a new court filing, Grayscale argued that the SEC’s rationale for the rejection was “illogical” and “fundamentally unreasonable”.

Grayscale is the largest digital asset management firm in the world and manages assets of over $10 billion. The firm’s Bitcoin Trust, which holds the world’s largest collection of bitcoin, is up 17.5% for the year, significantly outpacing the 5% rise in the price of bitcoin. Grayscale CEO Barry Silbert has long been an advocate of a spot bitcoin ETF, believing that such a fund would open up the asset class to more investors. However, the SEC has rejected applications for such funds multiple times, citing concerns about the potential for market manipulation and investor protection.

In a strongly worded court filing, Grayscale slammed the SEC for its “illogical and fundamentally unreasonable argument” against approving a spot bitcoin ETF. The firm argued that the SEC’s rationale for the rejection was flawed and not supported by market data. Grayscale also noted that the SEC’s decision was inconsistent with its approval of several other ETFs, which have similar market structure and exposure to similar risks.

Grayscale’s filing concluded by noting that the SEC’s argument was “unsupported by the record and contrary to the applicable law” and that the SEC had failed to provide a reasonable explanation for its decision. The firm urged the court to overturn the SEC’s decision and approve the spot bitcoin ETF.

The SEC’s decision to reject the spot bitcoin ETF has been met with widespread criticism from the crypto industry. Critics argue that the SEC has failed to recognize the potential of the asset class and is stifling innovation by preventing the approval of such funds. It remains to be seen how the court will rule on Grayscale’s case, but the firm’s legal challenge has certainly sparked an important debate about the role of the SEC in the crypto industry.

U.S. DOJ Seizes $456M of Robinhood Shares from Sam Bankman-Fried

• DOJ seized over 55 million Robinhood shares owned by Sam Bankman-Fried and FTX co-founder Gary Wang, worth $456 million.
• The shares had been held at U.K.-based brokerage ED&F Man.
• Sam Bankman-Fried was formally charged with money laundering, wire fraud and other crimes on Dec. 13.

The U.S. Department of Justice (DOJ) has seized over 55 million shares of Robinhood (HOOD) stock, worth approximately $456 million, owned by Sam Bankman-Fried and FTX co-founder Gary Wang. The shares had been held at an account at U.K.-based brokerage ED&F Man.

The stock was owned – via a holding company – by the two, who had used it as a form of collateral. However, the court document states that the “seized Assets constitute property involved in violations” of crimes such as money laundering and wire fraud. Sam Bankman-Fried was formally charged with those and other crimes on Dec. 13.

Bankman-Fried had requested that the shares be unfrozen, saying that he needed them to cover his legal fees. FTX, now run by John Ray III, had requested that the judge freeze the stock instead, claiming that Bankman-Fried had acted fraudulently. The judge ultimately sided with FTX, allowing the DOJ to take control of the shares.

The news of the DOJ’s seizure of Bankman-Fried’s shares has sent shockwaves throughout the cryptocurrency industry. Many are wondering if this could have long-lasting implications for the sector, as well as for the broader financial markets.

The case has also raised questions about Bankman-Fried’s future as a leader in the industry. While he has not been found guilty of any crimes, the allegations against him have certainly damaged his reputation. It remains to be seen how this will affect him and his business ventures in the long run.

Overall, the DOJ’s seizure of Bankman-Fried’s shares is a major development in the cryptocurrency industry. It remains to be seen how this will affect the sector and Bankman-Fried’s future in the industry.

117 Parties Interested in Buying Units of FTX Crypto Company

• 117 parties have expressed interest in buying units of FTX, a crypto company under bankruptcy protection.
• The U.S. Trustee has ordered FTX to prioritize the sale of LedgerX, FTX Japan, FTX Europe, and Embed.
• Perella Weinberg, an investment bank hired by FTX Group, has entered into 59 confidentiality agreements.

FTX, a crypto company that has recently filed for bankruptcy, has attracted a great deal of attention from potential buyers. According to a legal filing posted on Sunday, around 117 parties have expressed an interest in buying units of FTX. In order to ensure a speedy sale, the U.S. Trustee has ordered FTX to prioritize the sale of LedgerX, FTX Japan, FTX Europe, and stock-clearing platform Embed.

In order to facilitate the sale, FTX Group has hired Perella Weinberg, an investment banking firm, to represent them. Perella Weinberg has already entered into 59 confidentiality agreements with interested buyers. LedgerX, a derivatives arm of FTX US and one of the few companies in the empire to remain solvent, has received 56 expressions of interest.

The U.S. Trustee has also issued a deadline for initial bids, giving potential buyers a limited amount of time to make their intentions known. The estate has argued that selling the companies quickly is essential, since they may lose value if not sold promptly. FTX Group is currently in the process of evaluating the offers, and it is expected that the sale of the companies will be finalized soon.

The future of FTX is uncertain, and it is unclear how the bankruptcy case will play out. However, it is clear that the company has attracted a great deal of interest from potential buyers, and it remains to be seen how the sale of the various companies will affect the crypto industry as a whole. Regardless of the outcome, this case will certainly be closely watched by the crypto community in the months to come.