Bankrupt crypto exchange FTX is asking a judge for permission to sell off $744 million worth of assets. A new bankruptcy court filing shows that FTX and its debtors want permission to sell the company’s Grayscale and Bitwise assets through an investment adviser. According to the filing, “Similar to the debtors’ prior request to monetize […]
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Galaxy Digital is set to manage the sale of bankrupt FTX’s crypto holdings and facilitate the staking of certain tokens to generate passive yield.
Mike Novogratz’s digital asset management firm Galaxy Digital looks set to manage the remaining cryptocurrency holdings of bankrupt cryptocurrency exchange FTX.
On Aug. 24, the company filed a motion with the United States District Court for the District of Delaware seeking authorization and approval of guidelines for the sale of digital assets recovered during ongoing bankruptcy proceedings.
The filing outlines FTX’s requests and plans to transfer some $7 billion worth of recovered cryptocurrency tokens under Galaxy Digital’s management following the exchange’s collapse in 2022.
Related: FTX releases restructuring plan, hints at rebooted offshore exchange
FTX intends to provision for the potential sale of its cryptocurrency holdings and stake tokens through Galaxy Digital, as set out in its preliminary statement. The filing notes a “comprehensive management and monetization plan” for its cryptocurrency holdings that intends to reduce exposure to volatility and potential fiat repayments to creditors.
FTX intends to retain Galaxy Digital as a registered investment adviser, tapping into its “specialized knowledge” of digital asset markets to assist the company in maximizing the value of its token portfolio.
The company noted a number of potential benefits of the partnership, including being able to anonymously sell its holdings into the markets and mitigate the risk of market manipulation.
“Similarly, the Debtors expect that the Investment Adviser’s expertise will be crucial in assessing
FTX notes that the general investment guidelines will see Galaxy Digital sell various FTX-owned digital assets in the future, as well as being responsible for hedging Bitcoin (BTC) and Ether (ETH) before any potential sales.
FTX will look to sell its crypto holdings for fiat to reduce exposure to market volatility while taking advantage of liquid hedging markets for Bitcoin and Ether to lessen exposure to unexpected price fluctuations before their sale.
Decentralized Finance also gets a nod in the filing, with FTX noting that it intends to stake certain cryptocurrencies to generate passive yield income under the guidance of Galaxy Digital:
“The debtors submit that staking certain digital assets pursuant to the staking method will inure to the benefit of the estate - and, ultimately, creditors - by generating low risk returns on their otherwise idle digital assets.”
As bankruptcy proceedings continue, FTX recently filed a proposed restructuring plan that hints at creating a rebooted offshore exchange. This could see creditors be given the option to get a portion of their lost funds or opt for a share of equity, tokens and other interests in an FTX reboot.
Magazine: Can you trust crypto exchanges after the collapse of FTX?
Gemini CEO Cameron Winklevoss has published another open letter on Twitter, addressed to the board members of Digital Currency Group (DCG). In the letter, Winklevoss accuses DCG and CEO Barry Silbert of making poor decisions with the now-defunct crypto hedge fund Three Arrows Capital (3AC), and claims that DCG orchestrated a “campaign of lies” in […]
The exchange warned those who received payments from FTX or its former executives that it's looking to recover funds even if they were donated to charity.
Bankrupt cryptocurrency exchange FTX says it is considering using legal avenues to recover all payments and contributions handed out by its associated entities and former executives, which could include the millions in political donations made from its former CEO Sam Bankman-Fried.
In a Dec. 19 press statement, FTX said it had already “been approached by a number of recipients of contributions or other payments” that were made by, or at the direction of Sam Bankman-Fried or other officers, adding those entities have sought “directions for the return of such funds.”
Sharing our press release just issued: FTX Debtors Announce Process for Voluntary Return of Avoidable Payments https://t.co/l57F7zgKPJ
— FTX (@FTX_Official) December 19, 2022
Just last week, three prominent Democratic organizations pledged to return over $1 million worth of Bankman-Fried’s political donations on Dec. 16, following Bankman-Fried’s arrest and indictment.
Days earlier on Dec. 13, a press secretary for the White House was asked whether the Biden administration would return the $5.2 million in campaign donations previously given by Bankman-Fried but refrained from answering at the time.
In its recent statement, FTX invited those who received funds to “make arrangements for the return of such payments” warning if they weren’t returned voluntarily it would commence legal action in court to claw back the payments with interest.
Legal experts previously warned up to $73 million worth of FTX’s political donations could be targeted for recovery to repay the speculated one million creditors owed up to an estimated $10 billion to $50 billion in its bankruptcy case.
Meanwhile, some members of the United States Congress on the receiving end of FTX’s political contributions have reportedly donated the funds to charity in a bid to distance themselves from the exchange and its founder.
Members of Congress such as the Democratic leader in the U.S. House, Hakeem Jeffries and Senate Democrat whip, Dick Durbin have reportedly donated money received from FTX to various charitie.
Republican Senator John Hoeven similarly donated the $11,600 he received from Bankman-Fried and Salame to the Salvation Army.
However, FTX said these charitable offloads won’t be enough to stop it from coming after the funds, stating:
“Making a payment or donation to a third party (including a charity) [...] Does not prevent the FTX Debtors from seeking recovery.”
Bankman-Fried was the second-largest Democratic Party contributor with $36.8 million wired to candidates in the 2022 mid-term elections. He also funneled $5.2 million to Joe Biden’s 2020 U.S. presidential campaign becoming its second-largest “CEO-contributor.”
The FTX founder claimed in a Nov. 16 interview with crypto vlogger Tiffany Fong to have “donated about the same to both parties" but his donations to Republicans were “dark.”
Related: Sam Bankman-Fried agrees to US extradition 'to put the customers right': Report
Other FTX executives such as Ryan Salame donated around $20 million to Republican candidates and Nishad Singh donated at least $500,000 to the Oregon Democrats.
On Dec. 13 Bankman-Fried was charged with violations of campaign finance laws including contribution violations and obstructing the Federal Election Commission’s functions along with making contributions in the name of others.
The wallets were thought to be inaccessible following the death of the exchange's founder in 2018, as he had sole responsibility for the wallet's private keys.
Five wallets tied to the defunct Canadian cryptocurrency exchange QuadrigaCX, previously thought to be inaccessible, have just been spotted moving around $1.7 million worth of Bitcoin after years of dormancy.
Crypto researcher ZachXBT alerted the crypto community in a Twitter post on Dec. 19, highlighting the five wallets have transferred around 104 Bitcoin (BTC) on Dec. 17 to various wallets.
Blockchain records show the wallets had not sent BTC since at least April 2018.
Five wallets attributed to QuadrigaCX unexpectedly moved ~104 BTC on Dec 17 for the first time in years.
— ZachXBT (@zachxbt) December 19, 2022
1ECUQLuioJbFZAQchcZq9pggd4EwcpuANe
1J9Fqc3TicNoy1Y7tgmhQznWrP5AVLXj9R
1MhgmGaHwLAvvKVyFvy6zy9pRQFXaxwE9M
1HyYMMCdCcHnfjwMW2jE4cv9qVkVDFUzVa
1JPtxSGoekZfLQeYAWkbhBhkr2VEDADHZB
Once Canada's largest crypto exchange, QuadrigaCX declared bankruptcy in Apr. 2019 following the Dec. 2018 death of its founder and CEO, Gerald Cotten, who was solely responsible for the private keys of the exchange's wallets.
155,000 exchange users are owed up to $200 million in cryptocurrencies at the time of its bankruptcy.
In Feb. 2019, a report from Big Four accounting firm Ernst & Young (EY) — the firm overseeing the exchange’s estate — stated that QuadrigaCX accidentally transferred around 103 BTC on Feb 6. 2019 to cold wallets in which only the late-Cotten had access to — almost identical to the amount to the Bitcoin that has just recently moved.
At the time, the firm said it would be working with management to retrieve the cryptocurrency from the cold wallets.
Related: Crypto’s regulatory fate will be decided in the year ahead
The mysterious death of QuadrigaCX’s founder and CEO followed by the collapse of the exchange had sparked conspiracy theories that the founder faked his own death as part of a fraudulent exit scam.
The story was the subject of a 2022 Netflix documentary.
In 2014, years before his death, Cotten said on a podcast that the best way to keep private keys was to print them off and store them offline in a safety deposit box and revealed the exchange stored its private keys offline in the company’s safety deposit box at a bank.
It’s unknown if the movement of the BTC is related to EY's recovery efforts. Cointelegraph contacted EY for comment but did not immediately receive a response.
The fall of FTX appears to have brought back certain crypto "villains” out from hiding, one even wants to start a new podcast series.
Three Arrows Capital co-founder Su Zhu looks like he may be attempting a comeback amid the fallout over FTX and Sam Bankman-Fried — seen by some as the crypto industry’s newest supervillain.
After months of radio silence, Su Zhu remerged on Twitter on Nov. 9, the day after FTX revealed it was suffering from a “liquidity crunch.”
As the FTX saga has unfolded, Zhu has continued to post on Twitter, offering sage advice through poetic metaphors, while tweeting veiled criticism of Sam Bankman-Fried and his handling of FTX.
That being a better swimmer led to her death felt bizarre yet obvious
— Zhu Su (@zhusu) November 10, 2022
The better she could swim the more she underestimated nature, how the difference between people is like the difference between grains of sand, just as theres no mighty grain there is also no mighty person
In his latest Nov. 27 Twitter thread Zhu revealed his next steps — the launch of a “long-form video podcast series” that discusses “life, belief systems, and mental health” which will be launched with a collaborator and friend named “Cliff.”
In the tweet, Zhu also makes reference to Allah, a sign some believe means he had converted to Islam.
Cliff and I will launch a longform video podcast series soon discussing life, belief systems, and mental health.
— Zhu Su (@zhusu) November 27, 2022
Allah does not charge a soul except that which is within its capacity.
Recently, Zhu also hinted at creating a new trading firm in a Nov. 22 interview with Bloomberg saying it could be an “all-weather fund” — made to perform reasonably through all market conditions — that invests in traditional financial assets and crypto.
Zhu’s latest quasi-announcement has attracted more criticism than support, however, with many drawing a contrast between his actions at 3AC with the ideologies presented in Islam.
Blogger and nonfungible token (NFT) project founder Foobar asked “what does Allah say about interest-bearing loans?”
Another user pointed out that interest is “haram”, or forbidden under Islamic law.
Su: "sorry brah can't pay back the loan its not Sharia-compliant" pic.twitter.com/QsfJq7aDUL
— vechudnov (@chudnovglavniy) November 27, 2022
Over the last few weeks, the community has noticed a return of so-called “crypto villains” to Twitter following the collapse of FTX.
Related: It’s time for crypto fans to stop supporting cults of personality
Another Three Arrows Capital co-founder, Kyle Davies recently reappeared on Twitter after months of radio silence, posting on Nov. 13 on Twitter that he’d spent the last few months seemingly looking at grass and painting.
He even appeared on CNBC’s Squawk Box program on Nov. 16 to allege Alameda “hunted” 3AC’s positions.
My initial process was to spend my time searching and understanding. Less markets and screens, more grass and painting.
— Kyle Davies (@KyleLDavies) November 13, 2022
I will look to share my understanding to the extent it contributes to good and to light.
Yours Truly, Humbled and Gracious pic.twitter.com/z7YFvQwiRd
Alex Mashinsky, the founder of the bankrupt lending platform Celsius Network has also made a reappearance after FTX’s downfall, appearing in a series of Twitter Spaces over the last few weeks.
In a Twitter Space on Nov. 27 Mashinsky said he “loves the idea” of getting FTX to “pay for the hole” and asked listeners to “make a lot of noise” and convince bankruptcy lawyers for Celsius and its Committee of Unsecured Creditors to sue FTX to pay for Celsius’ cash deficit.
One of the more frustrating parts of the FTX collapse is that all of the previous villains are coming out of woodwork pretending like they are victims.
— Haym (@SalomonCrypto) November 24, 2022
Reminder: we are in this mess because of @KyleLDavies, @zhusu, @stablekwon, @SBF_FTX (others too but remember these 4). https://t.co/ltAd3SeA4H
It’s estimated that Mashinsky, Zhu, and Davies owe creditors around $6.3 billion.
Ethereum bull Anthony Sassano and Gnosis co-founder Martin Köppelmann were among those explaining later that the Wrapped Ethereum (wETH) FUD was part of an inside joke.
An inside joke about the “insolvency” of Wrapped Ethereum (wETH) over the weekend has forced influencers to explain it was just a “shitpost” after members of the community took it as real.
The wETH insolvency FUD (fear, uncertainty and doubt) seemingly began to make the rounds on Nov. 26, with false rumors alleging that wETH isn’t backed 1:1 by Ether (ETH) and is insolvent.
Blockchain developer and contributor to the ERC-721A token standard “cygaar” was one of the first to spread the joke, before confirming in a subsequent post that it was in fact a “shitpost” to see who was reading his content.
This is really a test to see who’s been reading my content.
— cygaar (@0xCygaar) November 26, 2022
In fact, only a day before, cygaar tweeted that “WETH cannot ever go insolvent” and that “WETH will always be swappable 1:1 with ETH.”
Ethereum bull and host of The Daily Gwei Anthony Sassano also joined in on the wETH joke with his own parody post on Nov. 27, but had to clarify later that the initial post was “shitpost/ meme” after reading the replies.
Reading the replies I feel like I should clarify
— sassal.eth (@sassal0x) November 27, 2022
This is a shitpost/meme - there is nothing wrong with WETH and you can always redeem 1 ETH for 1 WETH
Though if you don't believe me I'll buy all of your WETH right now for 0.3 ETH
Sell me all you want
Then go fuck off
Gnosis co-founder Martin Köppelmann was another one to get in on the joke, claiming in a Nov. 27 Tweet to his 38,800 Twitter followers that wETH is no longer fully backed by ETH and that “we might see a bank run on redeeming WETH soon.”
Hours later, he said he hoped the joke “did not cause too much confusion,” linking to a thread that explained the joke for those who weren't in the know.
I hope this joke did not caused too much confusion. If you need more context find it here:https://t.co/KDN3NvdO2z
— Martin Köppelmann (@koeppelmann) November 27, 2022
Related: What is wrapped Ethereum (wETH) and how does it work?
Speaking to Cointelegraph, Markus Thielen, the head of research at crypto financial services platform Matrixport has also confirmed that there is little to no truth to the WETH “shitposts.”
wETH’s logic is automated by smart contracts and it isn’t controlled by a centralized entity, he explained:
“I am not too concerned about WETH as it's a smart contract and not stored by a centralized exchange. Since the smart contract is open source, it can be checked for bugs or flaws.”
On the other hand, recent FUD against Wrapped Bitcoin (wBTC) could be warranted, said Thielen, referring to rumors that FTX may have printed 100,000 wBTC out of thin air, as FTX’s Nov. 11 bankruptcy filing does not show any BTC on FTX’s balance sheet.
“WBTC is completely different and here the concerns are valid,” Thielen explained.
wETH is a wrapped version of ETH that is pegged at a 1:1 ratio, which aims to solve interoperability issues on Ethereum-compatible blockchains by allowing for ERC-20 tokens to be exchanged more easily.
wETH was introduced as an ERC-20 token on the Ethereum network for this reason, as ETH follows different rules and thus cannot be directly traded with ERC-20 tokens.
Despite the lighthearted humor behind the jokes, “Dankrad Feist” suggested to his 15,500 Twitter followers in a Nov. 27 Tweet that the comments should be marked “more clearly as jokes” as it “may not be obvious to outsiders.”
A lot of people making jokes about WETH.
— Dankrad Feist (@dankrad) November 27, 2022
Please be aware it may not be obvious to outsiders that it's completely different from bridged assets and there is literally almost zero risk. I think it would be better to mark these more clearly as jokes.
wETH is currently priced at $1,196, at a current ratio of 0.999:1 to ETH, according to data from Coinmarketcap.
Galois Capital, New Huo Technology, and Nestcoin are just some of the crypto firms with funds stuck on FTX as the exchange undertakes bankruptcy filings in the United States.
The collapse of the cryptocurrency exchange FTX continues to have knock-on effects throughout the crypto industry with multiple crypto-focused companies reporting significant amounts of their capital stuck on FTX.
Between Nov. 11 to 14 three crypto companies announced large losses with one of them having to lay off workers to deal with the crisis.
On Nov. 11, crypto hedge fund Galois Capital announced it had “significant funds” stuck on FTX, with a Nov. 12 Financial Times report that said a possible $50 million worth of Galois’ assets were stuck on the exchange.
Other crypto-focused companies have reported their funds arestuck on the now-bankrupt exchange.
New Huo Technology, the owner of the Hong Kong-based crypto platform Hbit Limited announced on Nov. 14 it failed to withdraw $18.1 million worth of cryptocurrency before FTX stopped processing withdrawals.
$13.2 million of this loss are digital assets owned by Hbit users with the company saying it would continue to take steps to “withdraw the cryptocurrency as soon as possible,” bit admitted due to FTX’s bankruptcy filings the crypto “may not [be] able to be withdrawn from FTX.”
According to the announcement, Li Lin, the controlling shareholder of the company and founder of the Huobi crypto exchange agreed to loan up to $14 million to the company for it to use in processing withdrawals. However, the company does not yet know what the financial impact of FTX’s bankruptcy will be if it is never able to withdraw the funds.
Nigerian Web3 startup Nestcoin also announced it failed to withdraw funds from FTX with the company’s CEO, Yele Bademosi, posting to Twitter on Nov. 14 a letter previously shared with investors.
The letter detailed that Nestcoin will lay off workers “as we held our assets (cash and stablecoins) at FTX to manage our operational expenses” and it no longer has the funds to pay some staff.
An update shared with our investors earlier today on the FTX incident and its impact on @Nestcoin. pic.twitter.com/0Mjo4SYF7R
— YB (25,25) ⏳ (@YeleBademosi) November 14, 2022
Previously crypto data aggregator platform CoinGecko warned on Nov. 13 that layoffs across the crypto sector could increase in the coming months when the “full impact” of FTX’s sudden collapse takes effect.
Related: Will SBF face consequences for mismanaging FTX? Don’t count on it
On November 11, FTX said roughly 130 companies in its FTX Group including its United States entity FTX.US and sister trading firm Alameda Research declared they would file for bankruptcy in the U.S. after FTX suffered a liquidity crisis and was unable to process user withdrawals, leaving its customers without access to their funds held on the exchange.
Its Bahamas-based subsidiary, FTX Digital Markets had its assets frozen by the local securities regulator on Nov. 10 and liquidators appointed to safeguard its funds while the bankruptcy proceedings are undertaken.
On Nov. 7, 2022, the bitcoin mining firm Core Scientific released the company’s October update after the company’s Form 8-K U.S. Securities and Exchange Commission (SEC) filing on Oct. 26, 2022. The filing noted that the company was in the process of exploring “restructuring its existing capital structure.” The update published on Monday indicates that […]
One of the largest publicly listed bitcoin miners, Core Scientific, has shaken investors with a recent filing with the U.S. Securities and Exchange Commission that raises the possibility the company may apply for bankruptcy protection. The filing notes that Core Scientific will be unable to pay down debt payments due for Oct. and early Nov. […]