Prominent cryptocurrency lender Genesis recently sought out a $1 billion emergency loan via investors before suspending withdrawals on its website, citing a confidential fundraising document. According to the document obtained, Genesis is experiencing a liquidity crunch as a result of certain illiquid assets on its balance sheet. The development comes shortly after the recent FTX disaster which has shattered confidence in the market, particularly regarding crypto exchanges.

What happened?

FTX filed for bankruptcy in the United States last week. Shortly afterwards, its founder, Sam Bankman-Fried, resigned as CEO, after rival exchange Binance backed out of a proposed acquisition even though CEO Changpeng Zhao had initially agreed to a non-binding letter of intent to acquire the exchange. Since then, the development quickly snowballed into what became one of the worst events in the history of this sector.

Amid the liquidity crunch caused by the FTX controversy, Genesis had been considering all possible options. The company also stated that it made the decision to temporarily suspend redemptions too. This decision was made due to the fact that the FTX collapse reverberated throughout the industry, limiting liquidity at firms with exposure to the crypto exchange and prompting regulators in several countries to launch investigations including both in the United States as well as in The Bahamas (where Sam and his team were operating).

What comes next?

As a result of the Genesis changes, Gemini exchange said it would halt withdrawals regarding its interest-bearing Earn accounts. Interestingly enough, Genesis is the programs lending partner.

In other news, BlockFi is reportedly preparing to file for Chapter 11 bankruptcy. The cryptocurrency lender had already suspended customer deposit withdrawals and admitted to having significant exposure to FTX along with its sister trading house, Alameda Research. Furthermore, BlockFi intends to lay off more employees as it prepares for a possible Chapter 11 filing, though the company stopped short of saying that the majority of its assets are held by FTX.

Ultimately, many believe that we have yet to see the full effect of the FTX collapse. Rather worryingly, FTX may very well have over one million creditors, indicating the massive impact of its collapse on crypto traders and the overall industry going forward, particularly in the context of regulations.

Elizabeth Holmes, the founder of Theranos, has been sentenced to more than 11 years in prison for defrauding investors in her blood testing startup, which was once valued at $9 billion. At one point in time, Holmes was dubbed the next Steve Jobs and was said to be the worlds youngest self made billionaire.

The former Silicon Valley star claimed falsely that the technology could diagnose different diseases with just a few drops of blood. After a three-month trial, she was found guilty in January. Holmes is expected to file an appeal against the sentence, which was handed down in a California court this past Friday.

The supposed revolutionary technology that Holmes promoted did not work, and Theranos was dissolved by 2018. Holmes was also accused of lying to the firms financial backers about its performance. Before Judge Edward Davila handed down his sentence, Holmes delivered a tearful apology to investors and patients.

On November 16th, popular crypto exchange Bybit made the addresses of its biggest crypto wallets public. This followed the collapse of FTX and industry calls for increased transparency. It was through a recent press release that Bybit had listed the addresses.

Blockchain analytics firm Nansen also created a dashboard of Bybits wallets, which is an indication that the exchanges assets total more than $1 billion in Bitcoin, USD Coin, Tether, and Ethereum. According to the press release, these assets account for more than 85% of the total crypto held by the exchange.

Following the FTX disaster, Binance CEO Changpeng Zhao has advocated for all exchanges to develop a proof-of-reserves protocol that will demonstrate to the community that their assets are equal to or greater than their liabilities.

As it does not provide a Merkle tree of the exchanges liabilities to customers, Bybits release of wallet addresses would not be considered as PoR. However, releasing the wallet addresses is a requirement for later creation of a proof of reserve, should Bybit choose to do so.
 

Coinbase has formally filed an amicus brief in support of Ripple Labs Inc. in the 2020 lawsuit filed by the Securities and Exchange Commission against Ripple.

The SEC filed the aforementioned lawsuit against Ripple and its executives approximately two years ago, alleging that the sale of XRP constituted an offering of unregistered securities worth over $1.38 billion.

To ensure that the existing due process guidelines on which the fair notice defense is based continue to protect against unauthorised regulatory enforcement when needed, Coinbase mentioned in the filing that the SECs motion for summary judgment on this issue should be denied.

According to Coinbase, government agencies cannot condemn conduct as a violation of the law unless fair notice is provided. Moreover, by suing sellers of XRP tokens after making public statements signaling that those transactions were lawful, Coinbase claims that the SEC has indeed lost sight of this bedrock principle.

The collapse of FTX highlighted the importance of proof of reserves in mitigating risks and increasing investor confidence, prompting leading cryptocurrency exchanges to publicly list their hot and cold wallet addresses.

When attempting to confirm the availability of funds on Crypto.com, cold store information disclosed a suspicious transfer of 320,000 ETH on October 21st to a wallet address linked to Gate.io.

Given that Crypto.com claims that all user-owned cryptocurrencies are held offline in cold storage in collaboration with hardware wallet provider Ledger, concerns were understandably raised about the issue.

As the debate heated up, CEO Kris Marszalek revealed that the funds, which accounted for 82% of Crypto.com's ETH in cold storage at the time, were indeed sent to Gate.io by mistake.

On-chain data verifies that Gate.io returned 285,000 ETH to Crypto.com, but Marszalek claims that all funds were restored. Further investigation revealed that the missing 35,000 ETH was sent to a different address, which the crypto exchange has yet to confirm.

Alarmingly, this is not the first time Crypto.com has made headlines due to an unintentional transfer. In August 2022, it was discovered that the company had sent over $7 million to Melbourne-based investors in error, despite the fact that the refund was supposed to be just $67.

After much back and forth, Binance initially signed a non-binding letter of intent to acquire FTX, adding a surprising twist to the public feud between the worlds two biggest cryptocurrency exchanges, which contributed to a drop in the value of several tokens across the market. However, while the firms agreed to not disclose the deals value until the due diligence process was completed, certain revelations have since led to Binance reportedly backing out of the deal.

What happened?

FTXs native exchange token, FTT, was the subject of controversy after the balance sheet of FTX sister company Alameda Research was revealed. This sparked a public spat between Alameda CEO Caroline Ellison and Binance CEO Changpeng Zhao, who also owns a large number of FTT tokens.

Taking note of the findings in a recent report, Zhao stated that his exchange would start liquidating any remaining FTT on its books. Ellison responded on Twitter, saying Alameda was ready to buy any amount of FTT Binance wanted to unload for $22 each. However, Zhao appeared to reject Ellisons offer, saying Binance would stay in the free market.

Binance and FTX would then clash after Changpeng Zhao tweeted that his exchange would gradually withdraw billions of dollars in FTT due to certain revelations that came to light. As speculation about the solvency of billionaire Sam Bankman-Frieds crypto exchange grew, the FTX CEO initially tweeted that everything in FTX is satisfactory and that the assets were fine.

He also stated that FTX has sufficient liquidity to cover all client holdings and that the company does not invest client funds. He concluded by saying that FTX always has and will continue to process all withdrawals. However, much to his supporters surprise, Sam would then agree to the aforementioned deal with Binance. Eventually though, Binance would then reverse their decision to acquire FTX which only made the situation even worse.

What comes next?

Binance was the first investor to back FTX, but as the younger firm's popularity grew, the relationship between the two firms began to deteriorate. Following the announcement of the acquisition, FTX CEO Sam Bankman-Fried thanked Binance CEO Changpeng Zhao as well the general crypto community for their patience and understanding. Now though, it remains unclear as to what will happen as the entire crypto community and market suffered heavy losses due to the ongoing fiasco.

SBF further indicated that this is a user-focused development which will benefit the entire industry, and that Binance has done and will continue to do a fantastic job of expanding the global crypto ecosystem and fostering a more free economic environment for everyone. Once again however, many have come to doubt anything Sam says after additional details about him and FTX have since surfaced.

Ultimately, whether this was a strategic move for Binance which will benefit them in the long run or a decision taken in the spur of the moment, the fact remains that the worlds largest crypto exchange can now forge ahead seemingly unchallenged as it looks to work alongside regulators across the world. However, many have condemned Changpeng Zhao by calling his actions extremely predatory and have even accused him of intentionally destroying his competition. Elsewhere, Sam Bankman-Frieds net worth decreased by over 90% in just one day, effectively putting an end to his otherwise meteoric rise in the industry.

Following a liquidity crisis and the Binance and FTX fiasco, Sam-Bankman-Frieds company has now initiated US bankruptcy proceedings with the CEO officially resigning.

FTX had been struggling to raise billions of dollars to avoid bankruptcy following a wave of withdrawals and after a potential rescue deal with larger rival Binance fell through within a day.

FTX and its affiliated crypto trading fund Alameda Research, as well as roughly 130 other companies, filed for voluntary Chapter 11 bankruptcy in Delaware on Friday, according to a statement shared via Twitter.

The groups CEO has been named John J Ray III. SBF will reportedly be helping out in order to ensure a smooth transition. The former CEO also indicated that the bankruptcy filing does not have to mean the end of the companies and that he is trying to stay optimistic.

FTX stated in its bankruptcy petition that it has $10 billion to $50 billion in assets, $10 billion to $50 billion in liabilities, and more than 100,000 creditors.

A few investors, including Sequoia and SoftBank, had already written off their FTX investments. SkyBridge Capitals founder, Anthony Scaramucci, said on Friday that the alternative investment firm is working to repurchase its FTX stake.

Following a US Department of Justice raid, a large amount of stolen crypto was discovered in a popcorn tin. According to the DOJ, this was the second biggest financial seizure in recorded history. Moreover, after the seizure, the United States government now holds over 214,000 BTC, making up more than 1% of the total capped BTC supply.

Over 50,676 BTC, valued at approximately $3.36 billion at the time of discovery, were discovered hidden on various devices discovered within the home of a hacker who had stolen them from Silk Road, a dark web marketplace.

James Zhong, 32, pled guilty last week to wire fraud in September 2012, after taking advantage of a flaw in the websites payment structure. Mr Zhong pleaded guilty to hacking the website on November 4th and has surrendered his Bitcoin and other assets to police while awaiting sentencing. The punishment for his crime is up to 20 years in prison.

Breaking News:

Binance has signed a non-binding letter of intent to acquire FTX, adding a surprising twist to the public feud between the worlds two biggest cryptocurrency exchanges, which contributed to a drop in the value of several tokens earlier today. Moreover, until the due diligence process is completed, the firms will not disclose the deals value.

Binance was the first investor to back FTX, but as the younger firms popularity grew, the relationship between the two firms began to deteriorate. Following the announcement, FTX CEO Sam Bankman-Fried thanked Binance CEO Changpeng Zhao as well the general crypto community for their patience and understanding.

He further indicated that this is a user-focused development which will benefit the entire industry, and that Binance has done and will continue to do a fantastic job of expanding the global crypto ecosystem and fostering a more free economic environment for everyone.

Binance and FTX clashed recently after Binance CEO Changpeng Zhao tweeted that his exchange would gradually withdraw billions of dollars in FTX's native token, FTT, due to certain revelations that have come to light.

As speculation about the solvency of billionaire Sam Bankman-Frieds crypto exchange grew over the weekend, the FTX CEO tweeted early Monday morning that everything in FTX is satisfactory and that the assets are fine.

He also stated that FTX has sufficient liquidity to cover all client holdings and that the company does not invest client funds. He concluded by saying that FTX always has and will continue to process all withdrawals.

FTXs native exchange token FTT was loaded into a story last week revealing the balance sheet of FTX sister company Alameda Research. This sparked a public spat between Alameda CEO Caroline Ellison and Changpeng Zhao, who also owns a large number of FTT tokens.

Taking note of the findings in a recent report, Zhao stated that his exchange would start liquidating any remaining FTT on its books. Ellison responded on Twitter, saying Alameda was ready to buy any amount of FTT Binance wanted to unload for $22 each. Zhao appeared to reject Ellisons offer in a tweet Monday afternoon, saying Binance would stay in the free market.

JP Morgan has successfully completed its inaugural cross-border transaction using DeFi on a public blockchain. In doing so, the banking giant has begun paving the way for other banking and financial institutions to start using decentralized finance as a default infrastructure going forward.

Important details

On November 2nd, 2022, the Monetary Authority of Singapore (MAS) launched Project Guardian as part of a pilot program to explore potential DeFi applications in wholesale funding markets. To that end, the initiative was a vital step in investigating how traditional financial institutions, among various other use cases, can potentially utilize tokenized assets and DeFi protocols to successfully carry out financial transactions.

The pilot program was also attended by Singapores biggest bank (DBS Bank), SBI Digital Asset Holdings, and Oliver Wyman Forum. The transaction was carried out on the Ethereum Layer 2 network Polygon with the help of a modified version of the Aave protocols smart contract code. Furthermore, the MAS stated that a live cross-currency transaction incorporating tokenized Singaporean Dollar and Japanese Yen deposits, as well as a simulated exercise of purchasing and selling tokenized government bonds, was successfully carried out.

Additionally, Tyrone Lobban, JP Morgans Onyx business units Head of Blockchain Launch and Onyx Digital assets, stated that the tokenized Singapore dollar deposits became the first recorded instance of any bank issuing tokenized deposits.

What comes next?

According to MAS Chief Fintech Officer Sopnendu Mohanty, this is a huge step in the right direction, one that will significantly improve existing financial networks and help bridge the gap between them and DeFi. The CFO also said that the latest pilot has aided in the development of the countrys digital asset strategy as well.

Umar Farooq, CEO of Onyx by JP Morgan, a blockchain focused business unit within the asset management firm, claimed that JPMorgans on chain transaction on a public blockchain was nothing short of groundbreaking and will forever be known as a truly historic moment. The achievement comes as many top financial institutions have anticipated big things for blockchain oriented tokenization of real world assets.

Earlier in 2022, Boston Consulting Group predicted that the total value of tokenized illiquid assets would reach over $16 trillion by 2030. Popular DeFi lending protocol Aave also recently commented on the new pilot, calling it a monumental achievement for the industry because it indicates a gigantic step towards bringing traditional financial assets into DeFi.

Instagram has announced that a select group of digital creators will soon be able to mint and sell NFTs directly the social media platform instead of relying on various third parties.

The image based app recently launched its Digital Collectibles feature in 100 countries, thereby successfully enabling users to connect to their digital wallets and display NFTs that they created or purchased. The linked NFTs would therefore appear in users feed with a unique effect to indicate authenticity.

Moreover, the most recent update will enable creators to create their own digital collectibles and sell them on and off Instagram, providing them with a end-to-end toolkit which can be utilized for creating, displaying, and selling NFTs.

The new marketplace would also first be tested among a small group of creators in the United States, including Amber Vittoria, Dave Krugman, Jason Seife, Refik Anadol, and others, via the Polygon blockchain. Instagram will additionally support the Solana blockchain and the Phantom wallet along with video focused digital collectibles.

Meta stated that there will be no fees for displaying and sharing a digital collectible on Facebook or Instagram and that there will be no additional fees for selling digital collectibles either until at least 2024.

Furthermore, the company promised that neither creators nor collectors would have to pay gas fees for digital collectibles purchased on Instagram at launch. However, application store fees for Android and iOS may still be applicable.