Genesis strikes repayment deal with parent firm DCG to end $620M lawsuit

November 29, 2023 Coin Telegraph

Genesis strikes repayment deal with parent firm DCG to end 0M lawsuit

Digital Currency Group has over $320 million left to repay, according to Genesis, and the deal would see that remaining sum repaid by April next year.

Bankrupt crypto lender Genesis and its parent company, Digital Currency Group (DCG), has struck a deal that could end an ongoing lawsuit to claw back $620 million in repayments from DCG.

In a Nov. 28 filing to a New York Bankruptcy Court, Genesis said DCG agreed to pay its outstanding $324.5 million in loans by April next year, and Genesis can chase up on any unpaid amounts.

The proposed deal aims to allow Genesis to end a lawsuit filed against DCG in September that sought to have the firm repay overdue loans worth around $620 million. DCG has made some payments since the suit.

*Highlighted excerpt of the agreement between Genesis (GGC) and DCG. Source: Kroll*

Genesis said the repayment deal will provide it with “immediate significant and near-term benefits” and avoid the “risk, expense, and diversion of resources that would be required by litigation.”

The deal will form part of Genesis’ plans to pay back creditors, who will vote on the plan before it is sent to bankruptcy judge Sean Lean for a decision — who will consider the creditor’s votes.

Genesis also sued crypto exchange Gemini on Nov. 22, seeking to recover nearly $670 million in transfers.

Meanwhile, Genesis and Gemini are facing a lawsuit from the Securities and Exchange Commission, which claimed they sold unregistered securities. New York also sued the duo and DCG, alleging the trio defrauded investors.

Genesis filed for bankruptcy in January after suspending withdrawals in November 2022.

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SBF seeks to probe FTX lawyers’ roles in $200M Alameda loans

October 10, 2023 Coin Telegraph

Alameda

Sam Bankman-Fried’s legal team is seeking permission to cross-examine Gary Wang over FTX lawyers' involvement in Alameda loan approvals.

Sam Bankman-Fried’s legal team is looking for permission to probe the alleged involvement of FTX lawyers in the issuance of $200 million worth of loans from Alameda that were approved by Gary Wang.

As previously reported in the build-up to the highly anticipated trial, an Oct. 1 court ruling provisionally barred Bankman-Fried from apportioning blame to FTX lawyers who were allegedly involved in structuring and approving loans between Alameda and FTX.

United States Judge Lewis Kaplan granted the government’s motion and ruled that Bankman-Fried's legal team would have to request permission to make any mention of FTX lawyers' involvement throughout the trial.

Following the initial cross-examination of former FTX co-founder Gary Wang by the prosecution on Oct. 9, the defense is now seeking permission to question Wang over the alleged involvement of FTX counsel in structuring loans issued to FTX by Alameda.

A letter filed on Oct. 9 highlighted the government’s questioning of Wang over a series of personal loans worth up to $300 million from Alameda that FTX used to fund venture investments. Wang had also used some of the funds to purchase a home in the Bahamas.

During the prosecution's line of inquiry, Wang said that either Bankman-Fried or FTX lawyers had presented him with loans which he was then directed to sign.

Bankman-Fried’s attorneys argue that the prosecution has already established that FTX lawyers were present and involved in structuring and executing the loans and intend to carry out their own line of questioning over the scope of FTX counsel involvement.

A screenshot of the defense's letter requesting permission to question Gary Wang over the involvement of FTX lawyers in the structuring of loans to Alameda and senior executives. Source: Court Listener.

The defense adds that it could potentially introduce promissory notes that memorialized the loans to Wang, who has previously indicated to the prosecution in proffer meetings that he did not suspect FTX lawyers would coerce him to sign illegal agreements:

“Mr. Wang's understanding that these were actual loans - structured by lawyers and memorialized in formal promissory notes that imposed real interest payment obligations - is relevant to rebut the inference that these were simply sham loans directed by Mr. Bankman-Fried to conceal the source of the funds.”

Cointelegraph journalist Ana Paula Pereira is on the ground in New York covering the trial of Bankman-Fried. Her latest report from the Federal District Court in Manhattan highlights the defense's efforts to paint Bankman-Fried as a young entrepreneur who tripped up amid the rapid growth of FTX and Alameda.

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Coinbase launches crypto lending platform for US institutions

September 6, 2023 Coin Telegraph

Coin Telegraph

Coinbase’s new institutional lending service has the same operating entity as Coinbase Borrow, which halted issuance of new loans in May.

Cryptocurrency exchange Coinbase has rolled out a crypto lending service for institutional investors in the United States, reportedly aiming to capitalize on massive failures in the crypto lending market.

Coinbase has quietly launched an institutional-grade crypto lending platform, Coinbase Prime, to U.S. investors, according to a Bloomberg report on Sept. 5. Coinbase Prime is a full-service prime brokerage platform that lets institutions execute trades and custody assets.

“With this service, institutions can choose to lend digital assets to Coinbase under standardized terms in a product that qualifies for a Regulation D exemption,” the firm reportedly said in the statement.

According to a filing with the U.S. Securities and Exchange Commission, Coinbase customers have already invested $57 million in the lending program since the date of the first sale that occurred on Aug. 28. The offering had attracted five investors as of Sept. 1.

*Data from a SEC filing by Coinbase Credit. Source: Coinbase SEC Filings*

Coinbase did not immediately respond to Cointelegraph’s request for comment.

The new crypto lending product by Coinbase follows the halt of new loans issuance on Coinbase Borrow in May 2023. The program is designed to allow users to receive up to $1 million through a Bitcoin (BTC) collateral. The new institutional program is operated through Coinbase Credit, the same entity that manages Coinbase Borrow.

The news comes months after the U.S. SEC charged Coinbase with alleged offering and sale of unregistered securities in connection with its crypto starking services, which allow users to earn yields on giving their crypto to the platform. The exchange opposed the SEC’s allegations, arguing that it strongly disagrees with any allegations that its staking services were securities.

Coinbase eventually had to pause its staking program in four states, including California, New Jersey, South Carolina, and Wisconsin, while the proceedings were going forward.

The crypto lending industry was hit with a massive crisis last year, with major companies like BlockFi, Celsius and Genesis Global going bankrupt amid lack of liquidity caused by the bear market of 2022. Some crypto enthusiasts said that the crypto lending sector must learn lessons from the collapses and solve issues related to short-term assets and short-term liabilities.

Magazine: Magazine: How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in

Quantstamp introduces tool to detect protocols’ flash loan attack vulnerability

August 23, 2023 Coin Telegraph

Coin Telegraph

The new service, called Economic Exploit Analysis, uses University of Toronto research and will work on any EVM-compatible blockchain.

Blockchain security provider Quantstamp has launched an automated service to detect flash loan attack vectors in smart contracts. The new service is being called Economic Exploit Analysis and is based on research done at the University of Toronto.

Economic Exploit Analysis will be available to protocols, whether they have been deployed or not. It will enhance Quantstamp’s audits by identifying flash loan attack vulnerabilities in a client’s code. The service will be available on any Ethereum Virtual Machine (EVM)-compatible blockchain and is non-exhaustive — that is, it may not detect all attacks.

In decentralized finance (DeFi), a flash loan is an unsecured loan that has to be taken out and paid back in the same transaction. Flash loans can be used to take advantage of price differences between crypto exchanges (arbitrage), debt refinancing and similar actions. A flash loan attack is the manipulation of DeFi protocols in ways developers did not foresee. Quantstamp explained:

“Flash loan attacks can drain the entire TVL (total value locked) of a DeFi protocol, and their complicated nature combined with DeFi’s composability means these attack vectors often evade conventional audits.”

The need for greater security in DeFi markets is garnering increasing attention. The problem of flash loan largest attacks, in particular, was brought into focus when Euler Finance was attacked in March. Last year, over $2 billion worth of crypto was stolen in hacks and exploits.

Another day, another speaker for #L2Warsaw - @jgorzny, Head of L2 Scaling at @Quantstamp!

He'll discuss their new rollup security framework and its aim to standardize language for both users & developers.

Title: "Rollup Security Framework"
12:00 PM pic.twitter.com/3rW9UFZZoS
— L2BEAT (@l2beat) August 18, 2023

Coinbase’s new Base layer-2 is also addressing security vulnerabilities. It is developing a monitoring tool that it is calling Pessimism to “provide prompt notification of anomalies in the protocol and network, such as account balance irregularities, contract events, or disparities between L1 and L2 states,” it announced in a recent blog post.

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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CRV exposure risk throws a curveball at the DeFi ecosystem: Finance Redefined

August 4, 2023 Coin Telegraph

Coin Telegraph

Most DeFi tokens traded in the red on weekly charts due to the chaos caused by the Curve Finance exploit.

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you the most significant developments from the past week.

The $47 million Curve Finance exploit on July 30 had a domino effect on the DeFi ecosystem, mainly due to the $100 million loan taken out by the Curve founder against the platform’s native Curve DAO (CRV) token. Several lending protocols have rushed in with new governance proposals to minimize CRV exposure risks as the token price fluctuates. On Aug. 3, the native stablecoin of the ecosystem crvUSD depegged due to market conditions.

Being considered the backbone of the DeFi ecosystem, the Curve exploit could trigger a severe crisis.

The Curve crisis also had a negative impact on the price of the DeFi tokens, with a majority trading in the red on the weekly charts.

Curve Finance pools exploited by over $47 million due to reentrancy vulnerability

Several stable pools on Curve Finance using Vyper were exploited on July 30, with losses reaching over $47 million. According to Vyper, its 0.2.15, 0.2.16 and 0.3.0 versions are vulnerable to malfunctioning reentrancy locks.

“The investigation is ongoing but any project relying on these versions should immediately reach out to us,” Vyper wrote on X (formerly Twitter). Based on an analysis of affected contracts by security firm Ancilia, 136 contracts used Vyper 0.2.15 with reentrant protection, 98 used Vyper 0.2.16 and 226 used Vyper 0.3.0.

Continue reading

CEX price feed prevents Curve price from collapsing amid $100 million vulnerability

The CRV price collapsed on the DeFi market due to the significant draining of several pools; however, it was eventually saved by the centralized exchange price feed. CRV hit $0.086 on decentralized exchanges but traded at $0.60 on centralized exchanges (CEXs), preventing the token’s price from collapsing to zero.

Curve pools use Chainlink’s oracle system, which incorporates several price feeds, including centralized exchanges. If not for the CEX price feed, Curve Finance would have collapsed. This ironic incident drew the attention of Binance CEO Changpeng Zhao, who said that, in the end, it was a CEX price feed that saved the DeFi protocol.

Continue reading

Curve Finance founder’s $100 million debt could trigger a DeFi implosion: Report

While Curve Finance is still weathering the aftermath of its recent $47 million hack, another issue concerning holders of the DeFi protocol’s token has surfaced on the internet, sparking theories about how a massive dump could potentially happen.

On Aug. 1, crypto research firm Delphi Digital published an X thread detailing the loans taken out by Curve Finance founder Michael Egorov that are backed by 47% of the circulating supply of CRV. According to the research firm, Egorov holds around $100 million in loans across various lending protocols backed by 427.5 million CRV.

Continue reading

Curve’s crvUSD depegs as market reacts to shock events

Curve Finance’s native stablecoin, crvUSD, briefly depegged on Aug. 3, reacting to an uncertain environment surrounding the protocol after its recent exploit. On the day, the stablecoin fell by as much as 0.35% before regaining its peg to the United States dollar.

Curve’s crvUSD uses a mechanism for maintaining its peg called the PegKeeper algorithm, which manages the interest rate and liquidation ratio based on the stablecoin supply and demand to maintain its value. In other words, it ensures that the crvUSD value is properly backed by collateral while balancing supply and demand.

Continue reading

DeFi market overview

DeFi’s total market value saw a bearish decline in the past week. Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top 100 tokens by market capitalization had a bad week, with most tokens trading in the red. The total value locked into DeFi protocols remained below $50 billion.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.

Curve liquidation risk poses systemic threat to DeFi even as founder scurries to repay loans

August 1, 2023 Coin Telegraph

Coin Telegraph

A Curve Finance hack sparked a sharp sell-off, and while DeFi traders stepped in to support CRV, the possibility of a contagion-level event remains.

On July 30, Curve Finance, a decentralized exchange on Ethereum, suffered a hack due to a vulnerability in certain pools built using the Vyper programming language.

The price of Curve DAO (CRV) dropped 20.91% on the day of the hack, falling to a two-month low of $0.58.

The next day, the decline in CRV continued to a seven-month low of $0.48 amid fears of liquidation of hefty loans worth $100 million taken by Curve Finance founder Michael Egorov against CRV as collateral.

However, positive developments such as partial repayment of loans and significant negative bets in the derivatives market suggest that CRV may rally in the short term.

The DeFi community comes to save CRV

On Aug. 1, Egorov sold 39.25 million CRV tokens for stablecoins to a number of notable decentralized finance investors like Justin Sun, Machi Big Brother and DWF Labs for a total of $15.8 million, according to Lookonchain data.

More and more institutions and investors bought $CRV via OTC!

Machi Big Brother bought 3.75M $CRV.
DWF Labs bought 2.5M $CRV.https://t.co/MQg382LigF bought 2.5M $CRV.
...

Michael Egorov has sold a total of 39.25M $CRV via OTC and received 15.8M $USDT.https://t.co/hQBlW5WG6J pic.twitter.com/NMIQ2p05ZL
— Lookonchain (@lookonchain) August 1, 2023

The buyers purchased CRV at $0.40 per token, a 25% discount to the market price at the time.

Egorov also partially paid his Tether (USDT) loans on Aave, reducing the principal from $63.20 million to $54.1 million, per DeBank data. The partial repayment of the loan comes as a positive step in reducing the liquidation risk.

Currently, Egorov’s loans on Aave will be liquidated if the CRV price falls to $0.36 or lower, per DefiLlama.

CRV price analysis

The derivatives position of CRV traders suggests that the token may rally in the short term as a contrarian bet.

The funding rate for CRV perpetual swaps, which represents the relative demand for long or short positions, shows traders are actively shorting CRV, as its funding rate fell to -0.1% for eight-hour intervals, per CoinGlass data.

It raises the possibility of a short squeeze in the market, where short holders are forced to buy CRV as its price rallies.

The CRV/USD pair is trending near multiyear lows at around $0.50. If buyers are able to build support at this level, the price can rally in the short to medium term toward the horizontal resistance levels of $0.78 and $1.23.

*CRV/USD price analysis. Source: TradingView*

A long trade definitely comes with risks, as the hackers are still sitting on 7.1 million CRV tokens worth $4.5 million. If the attackers convert their holdings into stablecoins or more liquid tokens such as Bitcoin (BTC) or Ether (ETH), the price may revisit this week’s low, around $0.48.

Moreover, while Egorov has lowered the liquidation risk slightly, the risk is still not eliminated completely.

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.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

US Banks Facing $1,450,000,000,000 in Commercial Real Estate Exposure As Lenders Prepare to Sell at a Loss: Report

June 14, 2023 The Daily Hodl

DCG settlement with Genesis still undecided as 30-day mediation period proceeds

May 10, 2023 Coin Telegraph

Bankruptcy

The settlement plan proposed in February would give Genesis creditors 80% recovery of funds but many raised demands, leading to the mediation.

Digital Currency Group (DCG), the parent company of crypto firm Genesis Capital, has reported no solution to its “outstanding intercompany obligations” that could help reimburse creditors.

In a May 9 announcement, DCG said it was in the middle of a 30-day mediation period with Genesis in response to creditor demands. The firm proposed a settlement plan in February in which Genesis creditors had been expected to receive 80% recovery of funds after the firm filed for Chapter 11 bankruptcy.

However, in April Genesis creditors raised their demands, disrupting the bankruptcy proceedings and the “agreement in principle” between the two firms. Genesis reported it had between $1 billion and $10 billion in liabilities when filing for bankruptcy.

“On a parallel path and to provide further financial flexibility, DCG is in discussions with capital providers for growth capital and to refinance its outstanding intercompany obligations with Genesis,” said DCG. “We are committed to reaching a fair outcome for all and look forward to a productive resolution during this mediation period.”

1) DCG Statement on Genesis Mediation:https://t.co/f6h8kI9G5S

DCG continues to be engaged with the various stakeholders in the Genesis Capital restructuring process pursuant to the 30-day mediation period entered into by all parties on May 1.
— Digital Currency Group (@DCGco) May 9, 2023

In the wake of Genesis’ bankruptcy, the troubled crypto firm has often been at the center of legal issues between DCG and crypto exchange Gemini. DCG and Genesis reportedly owed roughly $900 million to Gemini’s clients locked out of their Earn funds — Genesis operated the program in partnership with Gemini. In January, Gemini co-founder Cameron Winklevoss threatened to file a lawsuit against DCG and CEO Barry Silbert if they couldn’t offer Gemini creditors “a fair deal."

U.S. authorities have also taken action amid the businesses’ financial troubles. In January, the Securities and Exchange Commission charged Genesis and Gemini with offering unregistered securities, and the New York State Department of Financial Services was also reportedly investigating Gemini over its Earn program.

The 30-day meditation period gives DCG and Genesis until the end of May to come to resolution on the proposed restructuring plan. In its initial Chapter 11 filing, Genesis said it planned to sell its assets at auction and exit bankruptcy on May 19.

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Coinbase to cease issuing new Bitcoin-backed loans via Borrow service

May 4, 2023 Coin Telegraph

cease issuing

The service allows users to borrow up to $1 million with no credit check, provided they post Bitcoin as collateral.

Crypto exchange Coinbase is stopping the issuance of new loans through its Borrow service — a product that allows certain United States customers to post crypto as collateral to receive a cash loan.

In an email sent to Coinbase Borrow customers on May 3 which was shared by recipients on Twitter, the exchange said — without providing a reason — that from May 10 customers won’t be able to take out new loans with Coinbase Borrow.

It added there would be no impact on outstanding loans and customers did not need to take any further action.

*A screenshot of the email sent to Coinbase customers advising that new Borrow loans would end on May 10. Source:* *Twitter*

Coinbase has not publicly addressed why it closed Borrow. A Coinbase spokesperson told Cointelegraph:

"We regularly evaluate our products to ensure we’re prioritizing the offerings that our customers care about most.”

The service allows users to borrow from the exchange against up to 40% of their Bitcoin (BTC) holdings, with a $1 million limit. It requires no credit check and users pay a nearly 9% annual percentage rate for the service.

The announcement is in the backdrop of a regulatory scuffle between Coinbase and the Securities and Exchange Commission (SEC), which sent the exchange a Wells notice in March, which the exchange said was in relation to “possible violations of securities laws.”

The email to users also proceed its first quarter results announcement, which is expected on May 4.

Investment analysts from Citi downgraded Coinbase shares from “buy” to “neutral” ahead of the exchanges Q1 earnings. Analyts from Mizuho also reportedly maintained its “underperform” rating on Coinbase saying its “fundamentals remain weak” citing lower average daily trading volumes.

Earlier this week, amid seeming crackdown on crypto firms in the U.S., Coinbase decided to take its exchange global, launching the Coinbase International Exchange (CIE) derivatives trading platform on May 2.

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Winklevoss twins infuse Gemini with $100M personal loan: Report

April 10, 2023 Coin Telegraph

Winklevoss twins infuse Gemini with 0M personal loan: Report

Business

The cash infusion reportedly followed Gemini attempting to get funding from outside investors without success.

Tyler and Cameron Winklevoss, co-founders of the United States-based cryptocurrency exchange Gemini, have reportedly dipped into their own pockets to fund the business amid the crypto market downturn.

According to an April 10 Bloomberg report, the Winklevoss twins made a personal $100-million loan to Gemini following attempts to get funding from outside investors. Cointelegraph reached out to Gemini for comment, but did not receive a response at the time of publication.

EXCLUSIVE: Gemini founders Tyler and Cameron Winklevoss have lent $100 million to the crypto platform https://t.co/owaGrepngE
— Bloomberg (@business) April 10, 2023

The reported loan came amid regulators scrutinizing Gemini’s activities. In January, the U.S. Securities and Exchange Commission (SEC) charged Gemini — as well as Genesis Global Capital and crypto exchange — with offering unregistered securities through the exchange’s Earn program. New York’s Department of Financial Services also reportedly began investigating the exchange following reports many Gemini users claimed assets in their Earn accounts had been afforded FDIC protection.

Following the announcement of the charges, Tyler Winklevoss accused the SEC of issuing a “manufactured parking ticket,” claiming Gemini staff had been in talks with the regulator for more than a year prior to its enforcement action. The complaint echoed that of crypto exchange Coinbase, whose chief legal officer said personnel met with SEC representatives “more than 30 times over nine months” but still received a Wells notice.

Magazine: SBF denies stealing FTX assets, SEC charges Gemini and Genesis, and more

loans

Curve Finance pools exploited by over $47 million due to reentrancy vulnerability

CEX price feed prevents Curve price from collapsing amid $100 million vulnerability

Curve Finance founder’s $100 million debt could trigger a DeFi implosion: Report

Curve’s crvUSD depegs as market reacts to shock events

DeFi market overview

The DeFi community comes to save CRV

CRV price analysis

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