Hello and welcome to the first edition of 2023 of the FT’s Cryptofinance newsletter. This week, we take a look at whether crypto has turned a new leaf after a dismal 2022. Spoiler alert: it didn’t.
Some of the biggest names in the crypto industry have been embroiled in clashes with regulators and prosecutors in the early days of 2023, showing that the problems that plagued the sector in 2022 are already spilling over into the new year.
“Reality never resets on January 1st, and that truth applies to crypto. The restructuring will continue – there will be more shoes, more victims of contagion, more customers who will find out their money is lost,” Charley Cooper, managing director of the Blockchain-Company R3, on Thursday via SMS.
Let’s start with US-listed exchange Coinbase.
The Brian Armstrong-led exchange has secured a $100 million settlement with regulators in New York for failing to combat money laundering. Half of these funds will be paid as a fine, while the other half will be spent by Coinbase to improve its compliance systems.
The New York State Department of Financial Services said Coinbase’s anti-money laundering enforcement systems were “immature and inadequate.” Coinbase called these flaws “historic” and said it has taken “significant actions” to address them.
We are now only a week into 2023 and three well-known crypto shops have already announced layoffs.
Crypto-focused bank Silvergate said it would cut 40 percent of its workforce. Shares of the company also plummeted 43 percent in Wall Street trading on Thursday after it said its digital asset clients were dumping deposits in late last year during a “crisis of confidence” fueled by the collapse of FTX had deducted more than 8 billion US dollars.
Similarly, crypto broker Genesis — which halted payouts from its lending program in November — cut 30 percent of its staff this week, just days after the company said it needed more time to find a solution to its financial woes . Cryptocurrency exchange Huobi Global, one of the world’s largest crypto firms founded in China, said on Friday it plans to cut about a fifth of its workforce as part of a “restructuring.”
still with me Well, there’s a lot more to come.
The founder of Celsius Network’s Alex Mashinsky was faced with a civil complaint by the New York Attorney General on Thursday. The former head of the bankrupt crypto lending platform is accused of defrauding hundreds of thousands of investors and flouting the state’s securities laws.
The former Celsius topman often used the slogan “unbank yourself,” but according to New York Attorney General Letitia James, “he promised to lead investors to financial freedom but led them down a path of financial ruin.”
Mashinsky denies James’ allegations. A lawyer for Mashinsky said the former founder “looks forward to vigorously defending himself in court.”
Binance found itself in the regulatory spotlight again after the US Securities and Exchange Commission (SEC) intervened in a $1 billion deal in which its US subsidiary would buy Voyager Digital’s assets out of bankruptcy. Wall Street’s top police officer said there was insufficient information to show how Binance US would complete the deal, while Binance US said a “careful review of the deal is to be expected and welcomed.”
Binance says its US subsidiary licenses its exchange technology but claims they are independent companies. However, Binance and its network of global subsidiaries have come under increased scrutiny after the collapse of rival FTX sparked renewed fears of opaque relationships between related crypto entities.
Finally, US Attorneys in Brooklyn unveiled fraud allegations against Aurelien Michel, a 24-year-old French man accused of NFT-Investors of “Mutant Ape Planet” by nearly $3 million in cryptocurrency to have cheated. His attorney did not respond to a request for comment.
Kudos to you for getting this far, but enough about 2023. In the next section I will update you on all the crypto stuff that happened over the Christmas holidays.
Thoughts on Crypto’s Start of the Year? Email them to me at firstname.lastname@example.org.
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- Former FTX CEO Sam Bankman-Fried has pleaded not guilty to eight criminal charges filed against him by the US Department of Justice. His plea comes after his former top employees pleaded guilty to fraud charges after agreeing to be cooperating witnesses. “It’s not clear that prosecutors want Bankman-Fried’s cooperation because Bankman-Fried is almost certainly their primary target in this investigation,” Peter Fox, a partner at Scoolidge, Peters, Russotti & Fox, told me via e-mail. Mail.
Do you remember when the in Solana resident DeFiplatform Mango Markets was hacked for more than $100 million? US prosecutors do. On Boxing Day, Avraham Eisenberg’s Christmas season was cut short when he was arrested in Puerto Rico. On December 27, authorities returned charges of merchandise fraud and tampering. He has since been issued with an arrest warrant and has not responded to a request for comment.
The day before Christmas Eve, Donald Trump said he started his NFT collection because he found some of the former president’s digitized artistic recreations.somehow cute“. Kind.
Soundbite of the week: “Bad Faith” stable tactics
As a reminder, Genesis first halted payouts from its lending program in November. The scheme allowed clients to set up their crypto coins against large returns. Crypto exchange Gemini, which Genesis used for its own “earn” program, was caught up in the debacle. Genesis owes $900 million to Gemini customers
Cameron Winklevoss, co-founder of Gemini, has lost patience with Barry Silbert, head of Digital Currency Group, parent company of Genesis and others including digital asset management firm Grayscale and crypto media site CoinDesk.
Winklevoss accused Silbert of “bad faith stable tactics” in an open letter on Monday.
“Over the past six weeks, we have done everything within our power to work in good faith and in a cooperative manner with you to reach an amicable resolution for the repayment of the $900 million that you owe. . . However, it is now becoming clear that you engaged in malicious delaying tactics.”
Silbert responded to Winklevoss, arguing that DCG tried to communicate with Gemini in late December but received no response. You can read the Twitter fallout here.
Data Mining: A Note About tether
The last 12 months have been a truly awful time for the crypto industry.
Bitcoin — the industry’s flagship cryptocurrency — fell about two-thirds in 2022. Tether, the company behind crypto’s largest stablecoin USDT, is also feeling the effects of an ongoing market drought.
According to data provider CryptoCompare, the monthly trading volume of the bitcoin-tether pair fell to 6.6 million coins in December, the lowest since April 2022.
Source: Crypto News Deutsch