CryptoSlate Wrapped Daily: SBF faces investor lawsuit in the US as Australia suspends FTX operations; LFG spent $2.8B on UST peg defense
Gemini exchange experience outage as it suspends withdrawals on Earn program, Messari estimate shows that FTX users may recover up to 50% of funds, and much more in this edition of CryptoSlate Wrapped Daily.
The biggest news in the cryptoverse for Nov. 16 includes Gemini halting withdrawals on its Earn program, Coinbase saying it has zero exposure to Genesis Trading, and Messari estimating that FTX investors may get back up to 50% of their funds after bankruptcy process.
CryptoSlate Top Stories
The ripple effect of the FTX collapse has forced U.S.-based crypto exchange Gemini to pause withdrawals on its Earn program. According to Gemini, its lending partner Genesis Global is no longer able to process customer redemption due to an increasing liquidity crisis.
However, Gemini claimed that only the Earns program was affected, as it maintains a full reserve for customers’ funds for other products and services.
Earlier on Nov. 16, trading services on Gemini were halted. The crypto exchange claimed it had experienced an Amazon Web Services outage which affected its database and exchange operations.
According to Gemini’s status page, wire transfers are still unavailable, however, the exchange claims that customers’ funds are safe.
Following Genesis’ insolvency issues due to the FTX collapse, Coinbase said it has no exposure to Genesis. Coinbase reportedly holds $1.5 billion of its capital on Chainlink and the other as Bitcoins.
Crypto lending platform Nexo has a real-time audit function (Armanino) that displays its total assets and liabilities condition per day. Unfortunately, the audit was not updated as expected on Nov. 16, which sparked rumors that the company may be facing insolvency.
However, a Nexo representative told CryptoSlate that the audit delay was due to a technical malfunction in Armanino’s design. Nexo confirmed that the team was working to resolve the error and automate the audit attestation to function as normal.
The Luna Foundation said that the audit report confirmed that the funds were not embezzled as rumors had it. Do Kwon added that Terra’s failure is different from that of FTX, where the operators misused customers’ funds.
On-chain sleuth ZachXBT called out SolChicksNFT CEO and COO for failing to inform the community about a $20 million treasury fund loss due to exposure to the collapsed UST.
In response, COO Lewis Grafton said it had disclosed the loss to its largest private holders. His response didn’t go down well with ZachXBT who took the selective disclosure as a discriminatory act against retail investors.
Messari Research Analyst Kunal Goel leveraged data from Financial Times to estimate that users who lost money to the FTX collapse may receive up to 50% of their funds when the bankruptcy process is over.
According to the balance sheet breakdown, FTX’s total assets and liabilities stand at $4,109 million and $8,859 million respectively, bringing the ratio of total assets to customers deposit to equal 0.49 (approximately 50%).
Solana-based prime brokerage platform Oxygen Protocol is on the verge of collapse as a significant portion of its ecosystem liquidity is trapped on FTX.
An investigation by mining analyst Jaran Mellerud revealed that Bitfarm’s total bitcoin holdings of 2,064, is about 141% of its loan. In the event that BTC’s price fell below $14,200, Mellerud fears that Bitfarm’s loan could be liquidated, which may threaten its continual operation.
The United States House Committee on Financial Services has called on Sam Bankman-Fried, Alameda Research, Binance, FTX, and related entities to deliberate on the FTX collapse and its consequences for the whole crypto ecosystem.
The committee added that it will work to hold bad actors accountable so that responsible players can build a more inclusive financial system.
Co-founder of bankrupt Three Arrows Capital (3AC) Kyle Davies showed up on CNBC to say that the FTX empire contributed to 3AC’s collapse. Davies claimed that Alameda had counter-traded and liquidated 3AC’s position.
Davis added that Sam Bankman-Fried knew about the ill deals, but chose to conceal a lot of things. However, the 3AC founder said his company is looking forward to justice.
News from around the Cryptoverse
FTX Australia suspended
The Australian Securities and Investments Commission (ASIC) has moved to suspend FTX’s operation in the region. The commission said that it will withdraw FTX’s AFC license by Dec. 19, 2022.
Binance secures license in Abu Dhabi
Binance has received the financial service permission (FSP) license to offer its crypto services to clients in Abu Dhabi.
In a similar development, Binance CZ confirmed that his exchange has signed 8 new investment deals for some crypto projects.
Sam Bankman-Fried sued in US court
Former FTX founder Sam Bankman-Fried has been sued by investors who claim that the exchange’s yield-bearing crypto accounts violated Florida laws, according to Reuters.