Coinbase pauses support for Signature Bank’s Signet: Report

March 20, 2023 Coin Telegraph

Banks

The U.S. crypto exchange was reportedly looking for another payment network provider and waiting on the outcome of the situation with Signature.

More than a week after New York regulators closed the crypto-friendly Signature Bank, Coinbase has reportedly stopped support for the institution’s Signet payment platform.

According to a March 20 report from The Wall Street Journal, Coinbase users won’t be able to use Signet to send funds outside of banking hours until further notice. The crypto exchange was reportedly looking for another payment network provider and waiting on the outcome of the situation with Signature.

The crypto-friendly bank was the third domino to fall following the failure of Silvergate Bank on March 8 and Silicon Valley Bank on March 10. Though financial regulators claimed they stepped in to “protect the U.S. economy by strengthening public confidence in our banking system,” reports have suggested that Signature had no issues with solvency at the time of its closure on March 12.

The U.S. Federal Deposit Insurance Corporation announced that the bank’s deposits and loans — with the exception of roughly $4 billion in crypto deposits — would be sold to New York Community Bancorp’s Flagstar Bank. The government corporation said it planned to provide crypto deposits “directly to customers” with a digital banking account.

Today, we entered into an agreement with a subsidiary of New York Community Bancorp, Inc., to purchase and assume deposits and assets out of Signature Bridge Bank. Read more ➡️ https://t.co/bSshY93lBh. pic.twitter.com/b9RBvYtGF7
— FDIC (@FDICgov) March 19, 2023

Coinbase, Celsius and Paxos all had funds tied to Signature at the time of the bank’s closure. Coinbase said it expected $240 million in corporate assets to be “fully recovered,” Paxos reported $250 million held at the bank, and Celsius announced some exposure but not the exact amount.

The United State House Financial Services Committee will be conducting a hearing to explore the failures of Silicon Valley Bank and Signature Bank on March 29. FDIC chair Martin Gruenberg and Fed Vice Chair for Supervision Michael Barr are expected to testify.

FTX debtors report $11.6B in claims, $4.8B in assets with many crypto holdings ‘undetermined’

March 17, 2023 Coin Telegraph

Assets

The presentation reported $25 million in donations — political and otherwise — from three of the FTX silos, but added “limited information” was available on crypto donations.

The debtors in FTX’s bankruptcy case hreported the various company silos had more than $4 billion in scheduled assets as of November 2022, but said they were still investigating the firm's crypto holdings.

In a March 17 filing with United States Bankruptcy Court for the District of Delaware, FTX debtors submitted a presentation to the committee of unsecured creditors on its Statement of Financial Affairs, or SOFAs, which also detailed the scheduled assets and claims of the company. According to the filing, the West Realm Shires silo — which includes FTX US and Ledger X — FTX.com, Alameda Research, and FTX Ventures had roughly $4.8 billion in scheduled assets and $11.6 billion in scheduled claims.

FTX Debtors make available summary presentation of the filed Schedules and SOFAs: https://t.co/Lr8PqxTHBt
— FTX (@FTX_Official) March 17, 2023

The data was based on petitioning financials from the four silos in November 2022. According to the report, Alameda held the majority of the scheduled assets at roughly $2.6 billion, but had “potentially material claims that have been filed as undetermined”. FTX.com had more than $11.2 billion in scheduled claims, but claims from FTX Ventures were undetermined.

Much of the data surrounding cryptocurrency holdings or transactions in the debtors’ report was not available. The presentation reported $25 million in donations — political and otherwise — from three of the silos, but added “limited information” was available on crypto donations.

Of the crypto-collateralized loans — largely in FTT tokens — made by the FTX companies, debtors reported more than 53 million tokens including Bitcoin (BTC), Ether (ETH), XRP, and USD Coin (USDC). However, they said “additional tracing of wallet and blockchain activity remains an ongoing matter”.

An investigation into crypto transactions as part of payments to FTX company insiders was also reported to be “ongoing”. Former CEO Sam Bankman-Fried received more than $2.2 billion of the payments.

FTX’s bankruptcy case has been ongoing since the firm filed for Chapter 11 protection in November 2022. In addition, Bankman-Fried faces both criminal and civil cases for his involvement in alleged fraudulent activities at the company.

Coinbase is planning to set up crypto trading platform outside US: Report

March 17, 2023 Coin Telegraph

Banks

The reported move came amid many U.S. lawmakers and regulators taking aim at crypto firms for their perceived role in the failure of three major banks.

Cryptocurrency exchange Coinbase is reportedly planning to set up a crypto trading platform outside the United States, where it is currently headquartered.

According to a March 17 Bloomberg report, Coinbase discussed setting up the non-U.S. platform with some of its institutional clients. The reported move came amid many U.S. lawmakers and regulators taking aim at crypto firms for their perceived role in the failure of Silvergate Bank, Silicon Valley Bank, and Signature Bank.

U.S. regulators including the Securities and Exchange Commission have been cracking down on certain crypto companies in recent months, including Kraken for its U.S. staking services. Coinbase issued a notice to users in March that its staking program would continue despite the crackdown and “may actually increase.”

Americans love their stake. Here’s why we need to keep staking–the accountant of the blockchain–in the U.S. pic.twitter.com/hPeM99LI3e
— Coinbase (@coinbase) March 16, 2023

The new Coinbase venture would reportedly service global clients, but does not yet have a confirmed location. Cointelegraph reached out to Coinbase, but did not receive a response at the time of publication.

Crypto firms may turn to ‘shadow banks’ following major collapses — Molly White

March 15, 2023 Coin Telegraph

Banks

Speaking at the SXSW conference in Austin, Molly White compared crypto companies' current predicament to that in 2017 and 2018, when they had “trouble accessing banking”.

In the wake of three major banks with ties to crypto firms collapsing, software engineer Molly White believes companies now looking at banking options may have to face “shadier” solutions.

Speaking on March 14 at a South by Southwest (SXSW) panel in Austin, Texas on ‘Popping the Web3 Bubble’, White opined that crypto firms’ options following the collapse of the crypto-friendly Signature and Silvergate banks may drive them metaphorically underground. White compared the situation to that in 2017 and 2018, when crypto projects had “trouble accessing banking” with less knowledge and acceptance from institutions.

“There were only a handful of U.S. banks that were really game to take crypto clients,” said White. “With Signature and Silvergate both out of the picture, I think that’s going to be very impactful on the crypto industry [which] still really needs access to traditional finance and to U.S. banking rails.”

She added:

“Without [Signature and Silvergate], I think the crypto industry is going to be having a tough time. They’re either going to have to find other banks that are willing to work with them, which was already tough, and will probably only be tougher after the collapses of these banks, or they’re going to have to turn to some of the sort of shadier shadow banks.”

*Molly White and Gerrit De Vynck speaking at SXSW in Austin on March 14*

Many in and out of the space have claimed the New York Department of Financial Services’ shutdown of Signature Bank was an overreach from authorities due to the firm’s connection to crypto companies. Signature board member and former U.S. Representative Barney Frank suggested U.S. government officials were attempting to send a “strong anti-crypto message” in closing the bank, while the New York regulator reportedly said Signature failed to provide “reliable and consistent data” on its activities.

The SXSW conference in Austin will be running until March 19 and feature many speakers from the crypto and blockchain space. Cointelegraph released an interview with activist and cybersecurity expert Chelsea Manning on how blockchain technology can be used to address challenges with artificial intelligence.

Recent contagion was ‘TradFi to crypto’ and not vice versa — Circle policy director

March 13, 2023 Coin Telegraph

Banks

“What happened over the last several days was a bit of an ironic black swan situation where the contagion was not from crypto to TradFi,” said Caroline Hill.

Caroline Hill, the director of global policy and regulatory strategy for stablecoin issuer Circle, has placed some of the blame from the recent collapse of banks tied to crypto on traditional financial institutions rather than digital assets.

Speaking on March 13 at a South by Southwest (SXSW) panel in Austin, Texas, on regulating cryptocurrencies, Hill alluded to some of the concerns around the depegging of Circle-issued USD Coin (USDC) amid reports the firm held more than $3 billion in reserves at Silicon Valley Bank. The price of the stablecoin dropped roughly 10% on March 10 before repegging to $1 on March 13.

“What happened over the last several days was a bit of an ironic black swan situation where the contagion was not from crypto to TradFi — the contagion was TradFi to crypto,” said Hill. “It is another reason why I think regulation is needed bringing stablecoin issuers closer to central banks is the right [way] to go, because ultimately we are a fully reserved model relying on a fractional banking industry.”

*Scott Bauguess, Caroline Hill and Peter Kerstens at a March 13 SXSW panel on crypto regulation in Austin, Texas*

U.S. lawmakers including Senators Kirsten Gillibrand and Cynthia Lummis proposed a crypto bill in 2022 that would have stablecoins overseen by the Office of the Comptroller of the Currency. Though never passed in Congress, the senators announced a few updated drafts of the legislation following events in the crypto market crash including the collapse of Terra and FTX.

Hill commented on how the recent events around Silicon Valley Bank, Silvergate Bank, and Signature Bank could affect such legislation going forwar:

“I’m going to hold that [federal standpoint legislation] continues to drive focus on the issue, and I think that it again draws even more importance to the consideration of who stablecoin issuers’ regulator would be, what access they would have that traditional financial institutions have — for instance, the Federal Reserve.”

Scott Bauguess, the vice president of global regulatory policy at Coinbase, said the European Union’s Markets in Crypto-Assets, or MiCA, framework had given the United States a “really nice baseline” for regulation, calling it a “very sensible approach” to crypto following the collapse of a major exchange like FTX. Though MiCA still awaits a final vote from EU policymakers, many expect the framework to go into effect starting in 2024.

Senator Lummis was originally scheduled to speak on the crypto regulation panel at SXSW. Cointelegraph reached out to her staff, but did not receive a response at the time of publication.

Silvergate Capital Corporation will ‘voluntarily liquidate’ Silvergate Bank

March 8, 2023 Coin Telegraph

Mt. Gox creditors have until March 10 to register and choose repayment method

March 7, 2023 Coin Telegraph

Business

Creditors have the option of a lump-sum payment, bank remittance, fund transfer service provider, or through a cryptocurrency exchange or custodian.

Creditors from Mt. Gox have until the end of the week to register and select a repayment method as part of the plan by which they will be compensated for their losses with the defunct crypto exchange.

In a March 7 announcement, Mt. Gox trustee Nobuaki Kobayashi reiterated a January notice reminding creditors who had not registered for repayment they had until March 10 to do so — two additional months as part of the rehabilitation plan proposed in October 2022. Kobayashi did not provide a reason for the extension, which would allow individuals who suffered losses at Mt. Gox to select a repayment method and register their information in an online rehabilitation claim filing system.

Creditors have the option of a lump-sum payment, bank remittance, fund transfer service provider, or through a cryptocurrency exchange or custodian. Experts have estimated that the losses from Mt. Gox users were worth billions of dollars following the collapse of the exchange.

MtGox creditors: are you unsure choosing between Early Lump Sum Payment or waiting for Final Payment? Both are perfectly valid and rational choices, and you should think for yourself and decide what's best for you.

A few considerations. https://t.co/WkwVcZysRh
— WizSec Bitcoin Research (@wizsecurity) March 2, 2023

The update from the Mt. Gox trustee may be one of the last announcements for the creditors’ rehabilitation plan that began in 2018. Roughly 99% of creditors affected by Mt. Gox going under had approved a draft rehabilitation plan in October 2021, with Kobayashi announcing in November 2021 that the plan was considered “final and binding” following a decision from a Japanese court.

Mt. Gox Investment Fund, one of the exchange’s largest creditors, reportedly chose a repayment plan that would allow it to receive the majority of its lost funds as early as September. It’s unclear exactly when other creditors can expect repayment in cryptocurrencies like Bitcoin (BTC) or fiat, but some estimates have suggested it could be several years.

Meet the person who offered a comfy bed for ‘scrappy’ hackers during ETHDenver

March 7, 2023 Coin Telegraph

Business

Jessy, the name behind Jessy’s Hacker House, helped organize four rental houses in Denver for "genuine scrappy" individuals looking for networking opportunities and more.

Thousands of developers, hackers, and crypto and blockchain enthusiasts descended upon Denver, Colorado in the United States for the ETHDenver conference from Feb. 24 to Mar. 5.

With accommodation a limited resource in the Colorado capital city, many opted to seek refuge from the crowds and tight quarters at "hacker houses" — where sleep is optional and networking is the goal.

Jessy, the name behind one such house — Jessy’s Hacker House — organized four "hacker houses" that hosted 50 participants from the ETHDenver conference and BUIDLWeek — a series of workshops and events as well as a BUIDLathon allowing teams to compete for prizes and investments.

Meeting with Cointelegraph at one of their houses on Feb. 28, Jessy and co-organizer Waylon Jepsen kept busy setting up posters and checking up on the guests’ comfort.

Eth Denver was great this year! We had a lot of amazing residents with @wehack247 this year. I’m so glad to call you all my friends. So bullish on the future we are all building ❤️ pic.twitter.com/nlFkzx8dzO
— Waylon Jepsen (@0xjepsen) March 6, 2023

According to the hacker-house host, she had been working at a venture capital firm in 2022 during the last ETHDenver conference when a number of people based abroad posted on social media they were looking for a place to stay in the Colorado capital city. Like many in attendance at the 2022 event, Jessy and her house guests tested positive for COVID-19 but were still able to network and develop projects.

“The motivation previously was like ‘hey, these are cool people — let’s just host them and get to know them’,” said Jessy. “For the longest time, it was a vehicle for me to find my own co-founder and discover what ideas I wanted to join.”

*Jessy at one of the hacker houses at ETHDenver 2023*

“The magic happens when you carry the most relevant people [...] We carry a diverse group of people. We have people who are very crypto native, we have people who are from academia who are doing cryptography and specific research [...] You have people who are like 19, 18-year-olds — who are freshmen — who are just starting their career.”

The four "hacker houses" scattered around the Denver Metropolitan Area were home to more than 50 people as well as a few visitors during the week of the conference. Roughly 300 technical-minded individuals applied for a place to sleep and networking opportunities at the houses, which were funded by sponsors in the blockchain space and overseen by Jessy and Waylon.

Though Jessy said there were some financial incentives to participating in the hacker houses — e.g. connecting with VCs and potential co-founders — guests could also personally benefit from the experience.

“You’re here to make long-term friends,” said Jessy. “I think the one model that we really have is play long-term games with long-term people. Part of the interview process is that we select people who we think fit the vibe, are genuine — genuine scrappy in the space.”

*View of the Rocky Mountains from the roof of the hacker house*

ETHDenver concluded on March 5, but other large conferences related to crypto and wallet in the immediate future include Paris Blockchain Week and Consensus in Austin, Texas. Though ETHDenver had not released official numbers on attendance at the time of publication, more than 30,000 people reportedly registered for the conference.

BIS wraps exploration project on retail CBDC payment system

March 6, 2023 Coin Telegraph

BIS

The bank concluded that a ‘hub-and-spoke’ model between CBDC domestic systems could “reduce settlement and counterparty risk" and complete cross-border transactions in seconds.

The Bank for International Settlements, or BIS, has reported it has concluded a project exploring international retail and remittance payments use cases for central bank digital currencies, or CBDCs, with the central banks of Israel, Norway and Sweden.

In a March 6 report, the BIS said it had finished Project Icebreaker, an initiative involving the bank’s Innovation Hub Nordic Centre testing key functions and the technological feasibility of interlinking domestic CBDC systems through the Central Bank of Norway, the Bank of Israel, and Sveriges Riksbank. According to the report, the BIS concluded that a ‘hub-and-spoke’ model between domestic systems could “reduce settlement and counterparty risk by using coordinated payments in central bank money and complete cross-border transactions within seconds”.

“Without a hub-and-spoke approach, each [retail CBDC, or rCBDC] system would need to make individual specific network and infrastructure configurations to communicate with other rCBDC systems,” said the report. “Communication between these rCBDC systems may not be standardised via a common interface and would instead be a bespoke integration between each pair of rCBDC systems. This would be not only complex to support and maintain but could also introduce cyber security risks.”

The #BISInnovationHub Nordic Centre and the central banks of Israel, Norway and Sweden have concluded Project Icebreaker, which studied the potential benefits and challenges of using retail #CBDC in international payments @riksbanken @NorgesBank https://t.co/2OfFYaPbr6 pic.twitter.com/jPFjrCXDlT
— Bank for International Settlements (@BIS_org) March 6, 2023

The report could provide the groundwork for a cross-border payment system should the central banks of Israel, Norway and Sweden move forward with issuing a digital shekel, digital krone, and digital krona, respectively. In October 2022, the bank reported that a CBDC pilot involving the central banks of Hong Kong, Thailand, China and the United Arab Emirates was “successful” after a month-long test facilitating $22 million worth of cross-border transactions.

In 2020, the Central Bank of the Bahamas became the first in the world to make a central bank-issued CBDC called the Sand Dollar available to all residents of the island nation. Other countries have been moving forward on large-scale trials of digital currencies, including China — the nation’s central bank reportedly distributed millions of digital yuan over the Lunar New Year holidays.

Coinbase announces acquisition of One River Digital Asset Management

March 3, 2023 Coin Telegraph

Business

As part of the acquisition, Coinbase said One River Digital’s team would join the exchange and CEO Eric Peters would stay to lead the firm under the name Coinbase Asset Management.

United States-based cryptocurrency exchange Coinbase has acquired cryptocurrency-focused hedge fund One River Digital Asset Management, or ORDAM.

In a March 3 blog post, Coinbase said One River Digital will transition to become Coinbase Asset Management, “an independent business and wholly-owned subsidiary” of the crypto exchange. One River Digital is registered as an investment adviser under the U.S. Securities and Exchange Commission, and has previously accepted investments from Coinbase to scale its operations.

“Coinbase and ORDAM share an ethos grounded in prudent risk management, a trait which has enabled both firms to successfully navigate the recent market turmoil,” said Coinbase. “Culturally, our two organizations are strongly aligned on pursuing the opportunity in digital assets with an uncompromising priority on safety and soundness.”

As part of the acquisition, Coinbase said One River Digital’s team would join the crypto exchange and chief executive officers Eric Peters would stay on as leader under the rebranded firm. The exchange suggested “minimal disruption to current business activities” amid the transition.

News of the acquisition followed Coinbase leading the charge in a slew of crypto firms cutting ties with Silvergate amid reports the bank was under investigation from the U.S. Department of Justice over its alleged involvement in the collapse of FTX. The crypto exchange has already announced Signature Bank will take over institutional client cash transactions for its prime customers.

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