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FTX Chasing Bank-Man Family For Answers Over Wealth: Says Report

Lawyers representing the insolvent FTX exchange request information from Sam Bankman-purported Fried’s family.

 

According to a court document, FTX requested permission to question the family about their riches and personal assets while they were under oath.

 

As the corporation continues to look for hidden assets to pay creditors, Sam Bankman-closest Fried’s family members and a few company officials are still in the limelight, according to Bloomberg on January 26.

 

To recoup as much of the missing billions owing to creditors and customers as possible, FTX advisers and legislators have adopted an aggressive strategy.

 

Joseph Bankman and Barbara Fried, the parents of SBF, are among the people the troubled company wants to interrogate.

 

Parents Wanted for FTX

Joseph Bankman, a law professor at Stanford Law School, advised FTX staff members regarding taxes, assisted in hiring the company’s initial attorneys, and claimed the document.

 

Additionally, Barbara Fried, his mother, had some involvement in the multi-billion dollar business, though specifics were not disclosed.

 

According to the filing, the brother, Gabriel Bankman-Fried, established a business to lobby members of the U.S. Congress from a lavish residence close to the U.S. Capitol.

 

Most of the millions spent on political donations from SBF and FTX went to the Democrats. According to Open Secrets, SBF was the seventh political contribution for the 2022 cycle. He contributed $40 million to federal parties, candidates, and political action organizations.

 

Before FTX attorneys can subpoena Bankman-family, Fried’s John Dorsey, the bankruptcy judge overseeing the case, must grant the request. If they were successful, they would have to submit to questioning and hand over paperwork to the judge.

 

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News

An Independent Panel Voted to File Bankruptcy for Genesis

The recommendation and decision to file for bankruptcy protection were made by a special committee of independent directors.

 

Genesis Capital’s parent business, Digital Currency Group, denied any involvement in Genesis’ bankruptcy filing in a statement on January 20. DCG claims that a bankruptcy filing was recommended and ultimately decided upon by an independent committee of directors.

 

Genesis will be able to seek the reorganization of debts, assets, and other business operations by filing for bankruptcy. The corporation put the range of its assets and liabilities at $1 billion to $10 billion.

 

Genesis Global Holdco, Genesis Global Capital, and Genesis Asia Pacific, collectively known as Genesis Capital, are the only lending firms affiliated with Genesis that have applied for bankruptcy protection. Both Genesis Global Trading and the spot and derivatives trading division of Genesis will continue to be in operation.

 

In addition to its other companies, Grayscale Investments, Foundry Digital, Lino Group Holdings, CoinDesk, and TradeBlock Corporation, DCG stated that it planned to carry on with business as normal.

 

DCG acknowledged that the company owes “$526 million due in May 2023 and $1.1 billion under a promissory note due in June 2032” in a letter to shareholders on January 17. In the course of restructuring, the company stated that it plans to settle its debts to Genesis Capital.

 

According to Cointelegraph, to maintain liquidity, the letter also declared a halt to quarterly dividend payments.

 

After the withdrawal suspension in November, which it attributed to the “extraordinary market instability” that followed FTX’s demise, Genesis’ issues became obvious.

 

Later, the business admitted it had $175 million trapped in an FTX account. Customers of Gemini were impacted by the withdrawal suspension, which led to requests for the DCG board to fire Barry Silbert as CEO.

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Featured News

Genesis, a crypto lender, has filed for Chapter 11 bankruptcy protection

Cryptocurrency lender Genesis Global has filed for Chapter 11 bankruptcy in the Southern District of New York, with estimated liabilities and assets of $1 billion to $10 billion according to a Jan. 19 filing.

 

The company had been in talks with its creditors and parent company Digital Currency Group to find a way to preserve assets and continue operations, according to a press release.

 

Genesis has begun a court-supervised restructuring process under Chapter 11 to explore options including a sale, capital raise, or equitization transaction with the goal of emerging under new ownership.

 

The derivatives, spot trading, broker-dealer, and custody businesses will not be affected and will continue as usual.

 

The company has stated that it has over $150 million in cash to support its ongoing operations and the restructuring process.

 

The restructuring will be overseen by an independent special committee of the board of directors and is intended to provide the best outcome for Genesis clients and users of Gemini Earn.

 

In November 2022, Genesis suspended withdrawals from its platform due to market turmoil caused by the failure of FTX. This affected users of Gemini Earn, a yield-bearing product offered by the Gemini cryptocurrency exchange managed by Genesis.

 

The co-founder of Gemini, Cameron Winklevoss, stated that the bankruptcy is a necessary step towards allowing Gemini users to recover their assets, but accused the parent company, DCG, and its CEO, Barry Silbert, of not offering a fair deal to creditors and threatened legal action unless a fair deal is reached.

 

Both Genesis and Gemini are facing charges from the SEC for offering unregistered securities through the Earn program.

 

The parent company, DCG, may have to sell part of its $500 million venture capital portfolio to offset Genesis’ liabilities.

 

On January 17th, DCG stopped dividend payments as a measure to reduce expenses and maintain liquidity. There is also talk of selling CoinDesk, a crypto media outlet, which could bring in $200 million.

 

 

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Core Scientific will stop operating its Celsius crypto mining hardware

The 2020 hosting agreement is the subject of a legal dispute between the two businesses, which Core Scientific claims are losing $2 million in monthly revenue.

After a U.S. bankruptcy judge authorized the move to reject its contract, bitcoin miner Core Scientific (CORZ) will shut down mining rigs connected to Celsius Mining, Core’s most significant client with over 37,000 units.

Both businesses are undertaking Chapter 11 bankruptcy proceedings: Core filed on December 21, while Celsius Mining filed on July 13, 2022, and its parent firm Celsius Network. The two businesses have been involved in a continuous lawsuit regarding their contract. Core alleges that Celsius is failing to pay its fair share, while Celsius responds that Core unilaterally increased its electricity rate in violation of the terms of its services contract.

The court ruling on January 4 said that all of Celsius’ mining equipment would be shut off starting on January 3 and not resumed during the transition time. Additionally, it is mandated that the mining equipment be picked up within 75 days of the scheduled shutdown date, with Celsius covering transportation costs.

Judge David R. Jones of Core’s bankruptcy declared during a hearing on Tuesday that the move to reject doesn’t contradict the property’s automatic stay (under U.S. bankruptcy law, once a petition for a Chapter 11 bankruptcy is filed, creditors are no longer able to collect debts from the bankrupt debtor, and Core is likely a Celsius creditor given their dispute over unpaid dues). Jones also referred to Celsius’ objection as a “strategic” move whereby Celsius is attempting to “take advantage” of the bankruptcy judge in its case without allowing the judge to express his concerns.

 

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News

The year 2022 Was Not All Bad For Crypto

Cryptocurrency prices dropped, and there were numerous bankruptcy filings at the year’s close. However, there were still some bright spots and reasons to be optimistic for 2022.

 

Coins started to decline at the beginning of Q2 and never recovered. Terra collapsed in May, causing Celsius, Voyager, and Three Arrows Capital to go bankrupt. In August, the Fed approved Tornado Cash. In November, FTX collapsed, causing BlockFi to go bankrupt and warning signs from Genesis and Digital Currency Group. Right now, cryptocurrency is being watched by everyone—but for the wrong reasons.

 

The year could have been better, though. You would be forgiven for missing or forgetting about the industry’s positive developments amid the widespread outrage over Sam Bankman-alleged Fried’s fraud.

 

The Ethereum merge event happened in September and went ahead without a hitch after years of anticipation and numerous delays. The second-most popular cryptocurrency, Ethereum, switched from the environmentally unfriendly proof-of-work mining method that Bitcoin employs to a proof-of-stake process that consumes 99% less energy.

 

Although it may take years for people to comprehend the effects of this change fully, Ethereum is now in a prime position to challenge Bitcoin in terms of adoption and perhaps even value in the future. The merge was not a shrug only because the price of ETH stayed the same after the event and because the mainstream response was more of a whimper than a bang.

 

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Crypto

A Major Bitcoin Miner, Core Scientific, Files for Bankruptcy Protection

One of the bitcoin miners by computer power, Core Scientific, filed for bankruptcy as the crypto winter continued to have a negative impact on the market.

 

The business filed for bankruptcy under the Southern District of Texas. According to the petition, the miner’s projected liabilities range from $1 billion to $10 billion. It has between 1,000 and 5,000 creditors, with investment banks holding the largest unsecured claim.

 

According to the filing, the miner’s assets are worth between $1 billion and $10 billion.

 

The greatest bankruptcy to date, Core Scientific’s, is expected to impact an already collapsing sector profoundly. Core Scientific accounts for 10% of the bitcoin network’s computing capacity, managing 143,000 mining operations and hosting another 100,000.

 

The company issued its first bankruptcy warning in late October and announced it would stop making some loan payments. This news caused its shares to drop by roughly 80%.

 

It stated once more in November that it might need more cash by the end of the year. The miner has been engaged in negotiations that appear to have fallen through to restructure its debt and raise financing.

 

 

Investment bank put out a financing plan for $72 million last week, including $40 million in funding that would be provided “soon” and with “zero contingencies.”

 

The remaining funds would be made accessible after the price of bitcoin reached $18,500, however. Core Scientific has an excess of $42 million in the bank.

 

One of Core Scientific’s main clients, lender Celsius’s mining division, and lender BlockFi, to whom it owes $54 million, have both filed for bankruptcy.

 

In July, Celsius Mining filed for bankruptcy. In September, Celsius Mining sued Core Scientific, alleging that the latter had broken the terms of the automatic stay.

 

According to Core Scientific, as of September 30, Celsius owes it $5.2 million. One of several victims of the collapse of cryptocurrency exchange FTX, BlockFi filed for bankruptcy in late November.

 

According to the filing, Core Scientific was operating 243,000 computers at the end of October, with 14.4 exahashes per second of bitcoin self-mining hash rate and 10 EH/s of hosted machines for other businesses. That amounts to around 10% of the current global hash rate, estimated at 243 EH/s.

 

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Crypto

Galaxy Digital Triumphs in the Auction to Acquire the GK8 from the Bankrupt Cryptocurrency Lender Celsius

Galaxy Digital, a financial services company with a cryptocurrency focus founded by Mike Novogratz, announced in a press release on Friday that it had won the auction to acquire the self-custody platform GK8 from the defunct cryptocurrency lender Celsius Network.

 

Although financial details of the transaction were kept under wraps, Galaxy spokesperson Michael Wursthorn said the amount was significantly less than what Celsius spent a year earlier. According to reports, Celsius purchased GK8 in November 2021 for $115 million.

 

Extending its premier brokerage product is Galaxy’s goal with the acquisition. The workforce at Galaxy would grow to about 40 employees, including cryptographers and blockchain technologists.

 

According to the company, pending regulatory approval, the purchase will increase Galaxy’s global reach by adding a new office in Tel Aviv, Israel.

 

As the company’s founder and CEO, Novogratz, remarked in the release, “Adding GK8 to our primary offering at this critical juncture for our industry also underlines our continuous determination to take advantage of strategic opportunities to build Galaxy sustainably.”

 

In July, Celsius filed for bankruptcy protection and listed some of its assets for sale due to a decline in the cryptocurrency market.

 

For its part, Galaxy gave up on its intention to pay $1.2 billion for cryptocurrency custody expert BitGo. Galaxy said that BitGo missed a deadline of July 31 when it should have submitted financial accounts in August.

 

In response to the deal’s collapse, BitGo sued Galaxy for damages in September.

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Crypto Featured News

As FTX Contagion Spreads, Blockfi declares Bankruptcy

Days after halting withdrawals due to the lingering effects of exchange FTX’s bankruptcy filing, crypto lender BlockFi filed for bankruptcy protection on Monday.

 

The business announced that it was seeking bankruptcy protection, indicating that it wanted to restructure while carrying on with business in the interim.

 

BlockFi has around $257 million in cash in hand, claims a press statement. A Bermuda-based affiliate is likewise submitting a similar form for liquidation.

 

BlockFi’s executives estimated the company has more than 100,000 creditors, and they marked off the ranges in the petition for the company.

 

According to executives, the company’s liabilities range from $1 billion to $10 billion.

 

The Securities and Exchange Commission, which has a $30 million unsecured claim, and West Realm Shires Inc., the corporate name of FTX US, which has a $275 million unsecured claim, are the major debtors of the corporation.

 

The names of the majority of the remaining top 50 creditors were not disclosed.

 

Ankura Trust Company, which the lender appears to have engaged in February and currently has a $730 million unsecured claim against BlockFi, is the company’s biggest creditor.

 

BlockFi has had a difficult year; withdrawals were banned a few weeks ago due to the continued uncertainty around FTX’s assets.

 

The company had to liquidate a sizable client early this year, and to stay afloat, it required a line of credit from FTX. BlockFi issued a warning to customers not to make any deposits to its wallet or interest accounts in the wake of the suspension of withdrawals.

 

After raising $350 million at a $3 billion valuation in March 2021, the lender was scheduled to raise money in June at a $1 billion down round valuation.

 

The business was planning to go public within the next 18 months, with a potential $500 million financing happening soon, as recently as last July.

 

 

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Crypto

Crypto Twitter Urges Restraint as a Joke about Weth’s Bankruptcy Goes Viral

Bitcoin bull Martin Köppelmann, a co-founder of Gnosis, and Anthony Sassano were one group to later clarify that the FUD of Wrapped Ethereum was an internal prank.

 

Influencers were compelled to clarify that wrapped ethereum’s “insolvency” is a weekend inside joke was just a “shitpost” after some community members mistook it for the truth.

 

On November 26, false claims claiming that it appears that the wETH insolvency FUD first gained traction when it became known that wETH isn’t backed Ether by 1/1 and is bankrupt first surfaced.

 

One of the first to share the joke was “cygar,” a contributor to the ERC-721A token standard who works on the blockchain, who later admitted that it was a “shitpost” to check who was reading his stuff.

 

Anthony Sassano, an Ethereum bull and The Daily Gwei, host similarly parodied the wETH joke on November 27.

 

However, after reading the comments, He felt compelled to explain that the initial post was a “shitpost/meme.”

 

Martin Köppelmann, a co-founder of Gnosis, also joined in on the joke, warned his 38,800 Twitter followers on November 27.

 

Following the WETH disclosure ETH was no longer fully backed that “we might observe a banking collapse on validating WETH shortly.”

 

A few hours later, he expressed his hope that the joke “did not create too much misunderstanding,” and he included a link to a post where the trick was explained to those unaware.