DeFi protocol Venus seeks to patch $270K hole from oracle incident

December 11, 2023 Coin Telegraph

Sam Altman-linked Meanwhile Advisors creates BTC private credit fund

December 7, 2023 Coin Telegraph

Hodlnaut heading for liquidation after failure of restructuring, sale efforts

November 10, 2023 Coin Telegraph

Algorand

Recovery from the crypto winter is proceeding, but Hodlnaut won’t survive it. A sealed court order in Singapore appears to spell its doom.

Crypto lender Hodlnaut’s days appear to be numbered after the High Court of Singapore ended judicial management and ordered its liquidation. Users’ funds have been frozen since August 2022.

Former Hodlnaut interim judicial manager (IJM) Aaron Loh Cheng Lee announced in a letter dated Nov. 10 and posted on the website of EY that he and fellow IJM Ee Meng Yen Angela have been discharged from that position and appointed liquidators.

*Aaron Lee's letter of Nov. 10. Source: EY*

The liquidation decision was made by the Singapore court in a Winding-up Order in response to their application. According to an attachment to Lee’s letter, that decision is sealed at the moment.

Singapore-based Hodlnaut suspended deposits and withdrawals and simultaneously withdrew its licensing application before the Monetary Authority of Singapore on August 8, 2022. The company attributed its decision to “recent market conditions.” According to Lee’s letter, Hodlnaut’s creditors include 17,000 users. Major creditors included Samtrade Custodian, S.A.M. Fintech and the Algorand Foundation.

Hodlnaut was apparently a victim of the systemic turmoil that struck the industry with the collapse of the Terra ecosystem and Three Arrows Capital (3AC). It did not have exposure to 3AC, but reportedly held around $150 million in Terra stablecoin, since renamed TerraUSD Classic (USTC), at some time. It later took another financial hit with the collapse of FTX.

The value of FLEX token — the proposed settlement digital currency for Hodlnaut’s $30 million buyout — has plummeted 90% since the offer was made in early August. https://t.co/PDgFgiKp4P
— Cointelegraph (@Cointelegraph) September 19, 2023

Hodlnaut avoided forced liquidation by applying for and receiving court-appointed IJMs. It subsequentlyreceived creditor protection and cut its staff by 80%. It also reportedly faced a police investigation of a delay in its reporting of its USTC holdings.

Creditors rejected a restructuring plan in January and voted overwhelmingly for liquidation in April. OPNX, founded by former 3AC founders Su Zhu and Kyle Davies, among others, offered $30 million worth of its FLEX token for a 75% share in Hodlnaut in August 2023, but that offer was rejected by the IJMs the following month after the value of FLEX plummeted by 90%.

A U.S. court approved the bankruptcy plan of crypto lender Celsius on Nov. 9.

Magazine: 3AC fugitives in disarray as OPNX faces new peril: Asia Express

Court confirms Celsius bankruptcy exit plan, $2B in crypto to go to creditors

November 9, 2023 Coin Telegraph

Bankruptcy

The decision ends the complex case with a creditor-approved plan that will see their partial reimbursement and make them shareholders in a new company.

The Celsius bankruptcy plan has been approved. The path is now clear for customers to see some of their funds returned and receive shares in the reorganized company, which will be called NewCo.

Judge Martin Glenn of the Southern District of New York Bankruptcy Court issued a confirmation on Nov. 9 of the bankruptcy plan approved by Celsius creditors overwhelmingly on Sept. 27. Under the plan, around $2 billion in Bitcoin (BTC) and Ether (ETH) will be redistributed to Celsius creditors along with equity in NewCo. The company has said it hoped to begin reimbursement of creditors by the end of the year.

*Judge Martin Glenn's bankruptcy plan confirmation. Source: Stretto*

Many of the Celsius creditors were participants in its Earn program, allowing them to earn weekly rewards by holding CEL token that were locked for a year. Judge Glenn wrote in his decision:

“Nothing in this Confirmation Order or the Plan constitutes a finding of the Court under any securities laws or otherwise as to whether CEL Token or the Earn Program are securities.”

The United States Securities and Exchange Commission has claimed similar programs are securities.

NewCo will expand existing mining operations of former crypto lender Celsius. It will also monetize illiquid Celsius assets and conduct other developmental activities, subject to regulatory approval.

NewCo will be managed by the Fahrenheit consortium, made up of several crypto-native persons and organizations. One of the consortium members is Proof Group, which is reportedly also bidding for FTX.

pic.twitter.com/PwyMicXbr5
— Celsius NewCo Community (@CelsiusNewCo) November 6, 2023

Celsius declared bankruptcy in July 2022. Its Celsius CEO Alex Mashinsky was arrested in July 2023 on charges of securities fraud, commodities fraud and wire fraud. He is expected to be tried in September 2024 and remains free on $40 million bail.

Former Celsius chief revenue officer Roni Cohen-Pavon pleaded guilty to fraud and price manipulationcharges and will be sentenced on Dec. 11.

Magazine: Tiffany Fong flames Celsius, FTX and NY Post: Hall of Flame

Luxor refutes claims its Bitcoin hashrate-backed product is BlockFi, Celsius 2.0

November 6, 2023 Coin Telegraph

Blockfi

“The return comes from hashrate, not from pixie dust, ponzi schemes, or rehypothecation,” a Luxor Technology executive stressed.

An upcoming Bitcoin (BTC) hashrate-backed product that could offer 10% to 13% returns shouldn’t be compared to failed products by BlockFi or Celsius as its returns come from proof-of-work, not “ponzi schemes,” claims the product’s creator Bitcoin mining firm Luxor Technology.

The legitimacy of Luxor’s hashrate-backed product was highlighted in an Oct. 17 What Bitcoin Did podcast. Host Peter McCormack expressed concern at Luxor's upcoming offering and discussed what a worst-case-scenario for Luxor’s product would look like.

Luxor’s Head of Derivatives Matt Williams told Cointelegraph that its hashrate-backed product isn’t a repeat of products from BlockFi or Celsius because it's backed by economic production.

“There is actual proof-of-work and demonstrable economic activity happening [here].” Williams said. “The return comes from miners giving up some of the margin that they would produce from their mining business to an investor that is financing their operation.”

“The main takeaway: the return comes from hashrate, not from pixie dust, ponzi schemes, or rehypothecation.”

Luxor’s product works through investors receiving a cut of loan repayments by posting Bitcoin as collateral to Luxor — which will then loan it to other miners to fund their operations.

The returns are created when hashrate is purchased from a Bitcoin miner at a discounted price and is then “locked in” when sold at a higher price. Bitcoin in the form of mining rewards come from that hashrate. Luxor estimates investor returns will range from 10% to 13%.

The process will be managed through Luxor’s upcoming hashrate marketplace.

Williams claimed the offering means miner’s are provided with “better” access to capital because they won’t have to sell their mined BTC to fund their operations.

“It can be a more economically viable option for miners because they can receive funding upfront while retaining ownership of their mined Bitcoin,” he added.

Luxor stressed it isn’t using its own mining pool and is only acting as an intermediary between investors and mining firms. “We only custody bitcoin for a very short period of time as we move funds from the buyer (investor) to the seller (mining firm),” Williams sai.

We understand your concern regarding rehypothecation, but to be clear again, there is NO rehypothecation with this product. The yield comes from mining rewards as stated in the podcast.

We're happy to have a conversation on this topic to answer your questions and address your…
— Luxor Technology ⛏️ (@LuxorTechnology) October 27, 2023

But those interested in making a return on their Bitcoin should tread with caution, says Joe Kelly, CEO of Bitcoin lending firm Unchained.

"Any investment or loan that requires a Bitcoin holder to part control with their Bitcoin should receive tremendous diligence and scrutiny,” he said.

“The bitcoin lending and borrowing markets are very nascent and we are likely to see repeats of the failures that happened with BlockFi and Celsius unless investors on the whole exercise extreme caution."

Williams stressed the hashrate-backed product isn’t available to everyone, only those who pass the firm’s due diligence checks.

TLDR: @LuxorTechnology intends to take customer Bitcoin and loan it to well established mining companies looking for funding.

Luxor will do ‘due diligence’ on the recipient of the loan and the donor will immediately start receiving #Bitcoin at a pre determined rate (ie 10-13%)
— The ₿itcoin Therapist (@TheBTCTherapist) October 27, 2023

Williams acknowledged Luxor's hashrate-backed product rightfully comes with “inherent trepidation” in light of the BlockFi and Celsius bankruptcies and noted that investors are taking on counterparty risk with Luxor.

To mitigate those risks, Luxor said it will only work with “reputable miners” and may even mandate them to post insurance.

Luxor did not share when the product will be available.

Magazine: Blockchain detectives: Mt. Gox collapse saw birth of Chainalysis

Hashing It Out: Diving into cross-chain DeFi lending

October 19, 2023 Coin Telegraph

Coin Telegraph

MultiChainZ chief operating officer Aanchal Thakur believes that cross-chain lending platforms will open users up to more liquidity.

Cointelegraph’s Hashing It Out podcast talked with MultiChainZ chief operating officer Aanchal Thakur to discuss a popular decentralized finance (DeFi) use case: lending. Host Elisha Owusu Akyaw and Thakur explored what makes a cross-chain lending platform different from other platforms and the potential risks it entails. Other highlights include conversations about institutions, DeFi lending, nonfungible token lending, and how projects embrace decentralized autonomous governance.

Thakur started her cryptocurrency journey by falling for a crypto doubling scam, which she claims taught her an important lesson to take her research of the industry more seriously. She went on to work on multiple projects before moving to MultiChainZ.

Thakur argued there is a strong case for building a cross-chain lending platform. She explained that funds are unavailable for many people globally, and that creating a lending and borrowing platform that cuts across multiple networks opens users up to more sources of liquidity.

The MultiChainZ exec also argued that overreliance on a single network may expose projects to a high level of risk. She explained that one of the proper ways to ensure decentralization is to use multiple networks.

“If a blockchain is not working for even two hours, when Solana was down for a few hours, it impacted so many users. It impacted the trust of those users. So, we realized that it does not make sense to build a product on a particular blockchain.“

Owusu Akyaw asked Thakur about bringing more institutions into Web3 through lending. According to Thakur, most institutional investors are concerned about risk and compliance. On risk, there is a need for a higher security threshold to attract major firms that manage huge sums of money. For compliance, she explained that although most Web3 developers like to look at the industry as a borderless environment, the real world has boundaries with regulations that need to be respected. Failure to work with regulators will keep more institutions away from the ecosystem, she believes.

Listen to this latest episode of Hashing It Out on Spotify, Apple Podcasts, Google Podcasts or TuneIn. You can also explore Cointelegraph’s complete catalog of informative podcasts on the Cointelegraph Podcasts page.

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin lender Ledn to roll out ETH, USDT interest accounts

September 28, 2023 Coin Telegraph

Bitcoin

Spurred on by user requests, Bitcoin lending firm Ledn is rolling out an Ethereum yield product.

Despite its roots embedded in Bitcoin (BTC) lending, lending platform Ledn has announced the launch of an Ether (ETH) yield offering following user requests for a shielded alternative to manually staking Ether.

The Cayman Islands firm has added an ETH offering to its Growth Accounts products, which currently offers users ring-fenced facilities to earn interest on Bitcoin and USD Coin (USDC) deposits.

An announcement shared with Cointelegraph highlighted user calls for a means to earn interest from ETH holdings without having to manually stake and manage Ether through liquid staking pools.

The lending firm also notes that its Growth Accounts are specifically ring-fenced from Ledn’s other products and services. Deposited ETH is only exposed to the counterparty that generates yield off the staked amount, which means that user deposits will remain unaffected if Ledn were to go bankrupt.

This is particularly pertinent given the high-profile failures of some of the cryptocurrency industry’s most prominent crypto lending firms. The likes of Celsius, Voyager and Three Arrows Capital highlight the potential pitfalls of over-extended and questionable lending practices that have plagued the industry.

Ledn chief strategy officer Mauricio Di Bartolomeo said that Ledn users have continually inquired about an Ether offering and remained confident that it would be a favorable alternative to self-managing ETH staking:

“This yield option is significantly easier to set up than native ETH staking. Looking forward, we’re working towards rolling out ETH support across the entire Ledn suite of products in the coming months.”

Ledn also announced that it will be launching a second stablecoin Growth Account, with users set to be able to deposit and earn interest on Tether (USDT) tokens from Oct. 12. These new offerings will not be available to United States or Canadian users.

Ledn is not the only Bitcoin-first company to gradually roll out support for cryptocurrencies other than BTC. Casa, a noncustodial wallet platform that began as a Bitcoin-only service, rolled out multisignature ETH self-storage in June 2023.

In August 2023, Ledn announced a partnership with Cayman Islands real estate company Parallel that would enable cryptocurrency users to invest in property to attain eventual residency.

Magazine: Home loans using crypto as collateral: Do the risks outweigh the reward?

OPNX’s $30M Hodlnaut bid rejected as FLEX token plummets 90%: Report

September 19, 2023 Coin Telegraph

OPNX’s M Hodlnaut bid rejected as FLEX token plummets 90%: Report

Bankruptcy

The interim judicial managers of Hodlnaut argued that the $30 million offer of FLEX tokens is “illiquid” and has “speculative value.”

The interim judicial managers of the collapsed cryptocurrency lender Hodlnaut have reportedly rejected the latest buyout deal amid the settlement token plummeting 90%.

Hodlnaut administrators have opposed the takeover terms from cryptocurrency exchange OPNX, which was established by Kyle Davies and Su Zhu, the co-founders of failed hedge fund Three Arrows Capital (3AC).

In a recent court filing, the interim managers argued that the $30 million offer of Flex (FLEX) tokens is “illiquid” and has “speculative value,” Bloomberg reported on Sept. 19. A majority of Hodlnaut Group’s creditors accounting for 60% of the total debt amount also opposed the OPNX deal.

The administrators referred to FLEX losing roughly 90% of value since OPNX made an offer to take over 75% of Hodlnaut in early August 2023. At the time of the proposal, FLEX traded at around $7. According to data from CoinGecko, the Flex Coin is trading at $0.58 at the time of writing.

*Flex Coin (FLEX) 90-day price chart. Source. CoinGecko*

Apart from the concerns around FLEX, Hodlnaut’s interim judicial managers were worried about “no injection of cash or assets with similar liquidity,” implying major digital assets like Bitcoin (BTC) or Ether (ETH). The managers were also unsatisfied with OPNX providing no timeline for repayment of creditors’ debt and no details of payment beyond 30% of liabilities.

FLEX is the native token of the Coinflex exchange, which is closely related to the OPNX platform as its founders Mark Lamb and Sudhu Arumugam also participated in the OPNX launch.

Coinflex suspended all withdrawals in June 2022, with the CEO citing extreme market conditions and “continued uncertainty involving a counterparty.” The exchange filed for restructuring in a Seychelles court as it seeks to recover $84 million in losses from a large individual customer. Coinflex expects to officially cease operations on Oct. 31, 2023, advising its customers to withdraw all funds from the platform by the shutdown date.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

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Genesis announces winding down of crypto trading services

September 14, 2023 Coin Telegraph

Bankruptcy

In January, Genesis Global Capital announced it would eliminate its crypto spot trading services “voluntarily and for business reasons” without additional details.

Crypto lending firm Genesis, a subsidiary of Digital Currency Group (DCG), will stop offering spot and derivatives trading for crypto assets through its British Virgin Islands unit.

According to a Sept. 14 statement from a Genesis spokesperson, the firm will “voluntarily and for business reasons” wind down its digital asset trading services through all of its entities. Genesis had been offering trading services through its GGC International arm in the British Virgin Islands.

The move followed Genesis Global Trading — a firm also affiliated with DCG but not subject to the same bankruptcy proceedings as Genesis Global Capital — announcing in January it would eliminate its crypto spot trading services under similar circumstances — i.e. “voluntarily and for business reasons”. GGC International had still been offering spot and derivatives trading at the time.

Genesis Global Capital halted withdrawals in November 2022, citing “unprecedented market turmoil” at the time. Reports from January suggested the firm could have laid off as much as 30% of its staff before it filed for Chapter 11 bankruptcy protection in New York. The SEC charged both cryptocurrency exchange Gemini and Genesis for offering unregistered securities through Gemini's Earn program.

The bankruptcy, legal, and regulatory entanglements between the various DCG subsidiaries and crypto firms — DCG is also the parent company of Grayscale Investments — have made waves in the space in the last year. Genesis blamed its collapse on Three Arrows Capital and reported it had suffered losses following the failure of crypto exchange FTX.

In August, DCG announced it had reached an “agreement in principle” with Genesis allowing creditors to recover the majority of their funds. However, Genesis lenders later described the deal as “wholly insufficient” — the firm reportedly owes roughly $3.5 billion to its top 50 creditors.

Magazine: Get your money back: The weird world of crypto litigation

South Korean Bitcoin lender Delio plans to sue regulators: Report

September 14, 2023 Coin Telegraph

bitcoin regulation

South Korean financial regulators accused Delio of fraud and embezzlement and seized its assets in July earlier this year.

South Korean Bitcoin lender Delio is reportedly preparing for an administrative lawsuit against regulators for the wrong interpretation of law leading to an investigation and hefty fine against the crypto lending firm.

Bitcoin lender Delio said the allegations of fraud and embezzlement levied by the Financial Service Committee (FSC) are baseless, according to a report published in a local daily. The crypto lender claimed that the regulator implied the law unreasonably in a situation where there were no clear regulations for virtual asset deposit and management products.

The report revealed that the Financial Intelligence Unit (FIU) recommended the dismissal of Delio CEO Jeong Sang-ho through a sanctions announcement on Sept. 1. Delio claimed that this was a clear indication that the financial authorities were putting pressure on Delio to close down the business rather than giving them a chance to revive. The FIU also imposed a three-month business suspension on Delio and a fine of $1.34 million (1.83 billion won.)

The firm also warned that the assets seized by regulators could put its operations in jeopardy.

Delio CEO Jeong Sang-ho said that these FIU sanctions leave a lot of room for unreasonable legal interpretation and arbitrary application,” and such behaviour by financial authorities could kill the domestic virtual asset industry.”

The major issue of conflict remains the interpretation of the existing laws, around whether a lending company that lends cash using virtual assets as collateral is considered a virtual asset business operator and whether the act of imposing a lock-up constitutes 'storage' of virtual assets under the Special Financial Services Act.

Delio argued that it is unclear whether virtual asset deposits and management products are considered financial products under the current law. One of the lawyers for the firm noted that there are no provisions for virtual asset-related laws and regulations regarding the virtual asset management business.

The lawyer said that the FIU arbitrarily interpreted virtual asset deposits and management products as financial investment products and sanctioned them which is the case of wrong interpretation of the law.

Magazine: Home loans using crypto as collateral: Do the risks outweigh the reward?

Lending