FTX goes up in flames and impacts the broader crypto industry, causing regulators to respond: Hodler’s Digest, Nov. 6–12

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Com­ing every Sat­ur­day, Hodler’s Digest will help you track every sin­gle impor­tant news sto­ry that hap­pened this week. The best (and worst) quotes, adop­tion and reg­u­la­tion high­lights, lead­ing coins, pre­dic­tions and much more — a week on Coin­tele­graph in one link.

Top Stories This Week

FTX and Binance’s ongoing saga: Everything that’s happened until now

An earth­quake rat­tled the cryp­to space this week, its impact felt in numer­ous relat­ed sto­ries regard­ing FTX, Alame­da Research and Binance. Although the bad news came rolling in this week, sus­pi­cions relat­ing to FTX’s sta­tus appear to have start­ed on Nov. 2. The con­cerns had to do with a large num­ber of FTX Token (FTT) held by Alame­da (Sam Bankman-Fried, aka SBF, found­ed Alame­da and co-found­ed FTX). By Nov. 6, Binance had decid­ed it would sell its siz­able posi­tion in FTT. FTX with­draw­al issues sur­faced on Nov. 7, symp­to­matic of a bank run. Binance expressed inter­est in buy­ing FTX but declined the pur­chase, cit­ing con­cerns on Nov. 9. 

Oth­er devel­op­ments through­out the week includ­ed SBF report­ed­ly request­ing $8 bil­lion to cov­er exchange with­drawals and news of the sit­u­a­tion affect­ing oth­er big play­ers such as Sequoia Cap­i­tal, as well as relat­ed reg­u­la­to­ry head­lines

Nov. 11 saw SBF’s res­ig­na­tion as well as FTX, Alame­da and FTX US apply­ing for Chap­ter 11 bank­rupt­cy in the Unit­ed States. About 130 enti­ties under FTX Group are fil­ing for bankruptcy.

Breaking: Bahamas securities regulator freezes FTX assets

On Nov. 10, FTX saw its assets frozen and its reg­is­tra­tion sus­pend­ed by the Secu­ri­ties Com­mis­sion of The Bahamas, based on sus­pi­cions of mis­han­dled client funds. A pro­vi­sion­al liq­uida­tor was elect­ed by the Bahami­an Supreme Court, mean­ing FTX must now obtain per­mis­sion to touch any of its assets. FTX is pri­mar­i­ly based in the Bahamas, falling under its juris­dic­tion. The sit­u­a­tion regard­ing FTX user with­drawals has been touch and go, with some with­drawals seem­ing­ly approved and funds leav­ing the exchange. Addi­tion­al­ly, FTX nego­ti­at­ed a deal with Tron to allow hold­ers of TRX, BTT, JST, SUN, and HT to swap assets from FTX to exter­nal wal­lets with­out penalty.

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Build­ing com­mu­ni­ty resilience to crises through mutu­al aid and Web3


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Daft Punk meets Cryp­toP­unks as Novo faces up to NFTs

Chainlink Labs offers proof-of-reserve service for embattled exchanges

Giv­en the sit­u­a­tion with FTX, talk has arisen around requir­ing cryp­to exchanges to come for­ward with proof-of-reserves, which would essen­tial­ly give assur­ance that exchanges have enough assets to cov­er their lia­bil­i­ties. Chain­link Labs has devel­oped a prod­uct that aims to ease that process for exchanges. Mul­ti­ple cryp­to exchanges have come for­ward with intent to pro­vide some kind of proof-of-reserves sys­tem (not nec­es­sar­i­ly Chainlink’s prod­uct, but some type of sys­tem in gen­er­al), includ­ing Binance, which has already made head­way on a proof-of-reserves system.

White House says ‘prudent regulation of cryptocurrencies‘ is needed, hinting at situation with FTX

This week’s tur­moil has dri­ven Unit­ed States Pres­i­dent Joe Biden’s admin­is­tra­tion to keep an eye on the cryp­to space, with the help of U.S. reg­u­la­to­ry bod­ies for enforce­ment. “The admin­is­tra­tion […] has con­sis­tent­ly main­tained that with­out prop­er over­sight, cryp­tocur­ren­cies risk harm­ing every­day Amer­i­cans,” White House Press Sec­re­tary Karine Jean-Pierre said dur­ing a press brief­ing on Nov. 10. “The most recent news fur­ther under­scores these con­cerns and high­lights why pru­dent reg­u­la­tion of cryp­tocur­ren­cies is indeed needed.”

Post-election roundup: Who were the pro- and anti-crypto winners and losers from the US Midterms?

The U.S. Midterm elec­tions occurred on Nov. 8. The cryp­to space had a pres­ence in the elec­tions, span­ning a broad num­ber of stances and posi­tions on indus­try reg­u­la­tion held by involved politi­cians. Among the mix, J.D. Vance, a known Bit­coin own­er, won an Ohio Sen­ate seat. Tom Emmer and Patrick McHen­ry, two fig­ures in favor of cryp­to, also retained their posi­tions in Min­neso­ta and North Car­oli­na, respec­tive­ly. Brad Sher­man, who is less favor­able toward the cryp­to space, achieved re-elec­tion in Cal­i­for­nia, however.

Winners and Losers

At the end of the week, Bit­coin (BTC) is at $16,932, Ether (ETH) at $1,274 and XRP at $0.37. The total mar­ket cap is at $859.61 bil­lion, accord­ing to CoinMarketCap.

Among the biggest 100 cryp­tocur­ren­cies, the top three alt­coin gain­ers of the week are PAX Gold (PAXG) at 5.69%, Gem­i­ni Dol­lar (GUSD) at 0.71% and Dai (DAI) at 0.14%.

The top three alt­coin losers of the week are FTX Token (FTT) at ‑89.18%, Solana (SOL) at ‑50.30% and Loopring (LRC) at ‑38.47%.

For more info on cryp­to prices, make sure to read Cointelegraph’s mar­ket analy­sis.

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Attack of the zkEVMs! Crypto’s 10x moment

Most Memorable Quotations

“If the world econ­o­my is a cir­cu­la­to­ry sys­tem, it is stag­nant. Parts are dying.”

Michel Khaz­za­ka, cryp­tog­ra­ph­er and founder of Valuechain

“If you look at it close­ly, frac­tion­al NFTs rep­re­sent the very essence of the Web3 concept.”

Alex­ei Kulevets, co-founder and CEO of Walken

“I think what peo­ple often mis­un­der­stand is that Web3 is not an exclu­sive new inter­net. Inside Web3 we also find Web2, the same way we found the for­mer World Wide Web with­in Web2.”

Max Kordek, pres­i­dent of Lisk

“With a glob­al MiCA [Mar­kets in Cryp­to-Assets reg­u­la­to­ry frame­work], the FTX crash would not have happened.”

Ste­fan Berg­er, mem­ber of the Euro­pean Par­lia­ment Com­mit­tee on Eco­nom­ic and Mon­e­tary Affairs

“All cryp­to exchanges should do merkle-tree proof-of-reserves.”

Chang­peng “CZ” Zhao, CEO of Binance

“FTX.com was an off­shore exchange not reg­u­lat­ed by the SEC. The prob­lem is that the SEC failed to cre­ate reg­u­la­to­ry clar­i­ty here in the US, so many Amer­i­can investors (and 95% of trad­ing activ­i­ty) went off­shore. Pun­ish­ing US com­pa­nies for this makes no sense.”

Bri­an Arm­strong, CEO of Coinbase

Prediction of the Week 

Bitcoin price bottom takes shape as ‘old coins’ hit a record 78% of supply

Bit­coin start­ed the week above $21,000, although the asset fell notably after the FTX news broke, dip­ping below $16,000 on Nov. 9, accord­ing to Cointelegraph’s BTC price index. BTC sub­se­quent­ly bounced back up to $18,000, but then declined once again. 

Pseu­do­ny­mous Decen­trad­er co-founder Filb­filb explained why the FTX sit­u­a­tion is such a big indus­try event. His expla­na­tion essen­tial­ly stat­ed that all was fine dur­ing the most recent cryp­to indus­try bull mar­ket, but play­ers became overex­tend­ed. Then the bear mar­ket came along and declin­ing prices cre­at­ed holes in com­pa­ny bal­ance sheets. He explained that a healthy recov­ery could be a mul­ti-year effort.

FUD of the Week 

Report: Tether freezes $46M of FTX’s USDT, setting new precedent

Sta­ble­coin issuer Teth­er Lim­it­ed has seem­ing­ly frozen about $46 mil­lion worth of USDT held in FTX’s Tron blockchain wal­let, based on blockchain obser­va­tions from Whale Alert on Nov. 10. Teth­er has not pre­vi­ous­ly frozen a com­pa­ny or exchange wal­let, only pri­vate­ly-owned wal­lets in tan­dem with reg­u­la­to­ry inves­ti­ga­tions. In com­ments to Coin­tele­graph, a Teth­er spokesper­son did not con­firm the sus­pect­ed freeze but not­ed the firm’s reg­u­lar com­mu­ni­ca­tion with law enforcement.

Bitcoin miner Iris Energy faces $103M default claim from creditors

Bear mar­ket casu­al­ties con­tin­ued this week, as news sur­faced of renew­able ener­gy Bit­coin min­ing oper­a­tion Iris Energy’s finan­cial strug­gles. Accord­ing to a default notice issued by min­ing rig man­u­fac­tur­er Bit­main Tech­nolo­gies, the firm report­ed­ly owes $103 mil­lion in total. Mul­ti­ple fac­tors have seem­ing­ly con­tributed to Iris Energy’s declin­ing finan­cial posi­tion, such as Bitcoin’s depressed price and elec­tri­cal cost hikes. 

BlockFi limits platform activity, including a halt on client withdrawals

With­drawals and oth­er fea­tures have been paused on Block­Fi, with the dig­i­tal asset lend­ing plat­form explain­ing that it is wait­ing for clar­i­ty around the FTX ordeal. Addi­tion­al­ly, Block­Fi not­ed that cus­tomers should refrain from deposit­ing on Block­Fi wal­lets or its inter­est plat­form. Block­Fi and FTX US pre­vi­ous­ly struck a deal involv­ing a $400 mil­lion line of cred­it giv­en to BlockFi.

Best Cointelegraph Features

How to stop your crypto community from imploding

“There were a lot of cypher­punks at those ear­ly Bit­coin mee­tups that I went to.”

Some central banks have dropped out of the digital currency race

There are at least four coun­tries that have either scrapped or halt­ed CBDC plans so far, and each cen­tral bank has its own rea­son­ing for not launch­ing one.

Could Bitcoin have launched in the 1990s — Or was it waiting for Satoshi?

With the inter­net, ellip­tic curve cryp­tog­ra­phy, even Merkle trees and PoW pro­to­cols all present, Bit­coin was “tech­ni­cal­ly pos­si­ble” in 1994.

Editorial Staff

Coin­tele­graph Mag­a­zine writ­ers and reporters con­tributed to this article.

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