CRIMINAL CRYPTO CAPITALI$M
Bankrupt crypto lender BlockFi accidentally reveals it had over $1.2 billion in assets tied up with FTXZahra Tayeb
Wed, January 25, 2023
BlockFi filed for bankruptcy last November, citing heavy exposure to FTX.
Chukrut Budrul/ SOPA Images/ LightRocket/ Getty Images
Bankrupt crypto lender BlockFi's secret financials revealed linkages of over $1.2 billion to FTX.
The disclosure was accidentally revealed in unredacted financial documents, per CNBC.
BlockFi filed for bankruptcy last November, citing heavy exposure to Sam Bankman-Fried's collapsed exchange.
Bankrupt crypto lender BlockFi accidentally revealed it had over $1.2 billion in assets tied to FTX and its sister trading arm Alameda Research, according to CNBC.
The redacted sections include "trade secret[s] or confidential research, development, or commercial information," one of the filings show.
The findings show BlockFi's exposure to Sam Bankman-Fried's collapsed crypto empire was greater than previous disclosures had indicated.
As of January 14, unredacted filings show BlockFi had $415.9 million worth of assets linked to FTX and $831.3 million tied to Alameda. However, lawyers representing BlockFi previously said the firm had $355 million in digital assets stuck on FTX, and loaned $671 million to Alameda.
BlockFi did not immediately respond to Insider's request for comment.
The company has been on a rocky road in the past year. It filed for Chapter 11 bankruptcy protection last November, citing significant exposure to FTX and the now-defunct crypto hedge fund Three Arrows Capital. The crypto lender has over 100,000 creditors, with liabilities and assets ranging from $1 billion to $10 billion.
It's entanglement with FTX began last July, when the company inked a deal with Bankman-Fried's exchange to receive a $400 million revolving credit line as part of a rescue deal. But that deal crumbled after FTX suffered its own liquidity crisis and went bust.
As BlockFi undergoes bankruptcy proceedings, it has sought court approval to pay bonuses to employees. It told the court last November that holding onto key members of staff was critical to its efforts to reorganize the company.
Bankrupt crypto lender BlockFi's secret financials revealed linkages of over $1.2 billion to FTX.
The disclosure was accidentally revealed in unredacted financial documents, per CNBC.
BlockFi filed for bankruptcy last November, citing heavy exposure to Sam Bankman-Fried's collapsed exchange.
Bankrupt crypto lender BlockFi accidentally revealed it had over $1.2 billion in assets tied to FTX and its sister trading arm Alameda Research, according to CNBC.
The redacted sections include "trade secret[s] or confidential research, development, or commercial information," one of the filings show.
The findings show BlockFi's exposure to Sam Bankman-Fried's collapsed crypto empire was greater than previous disclosures had indicated.
As of January 14, unredacted filings show BlockFi had $415.9 million worth of assets linked to FTX and $831.3 million tied to Alameda. However, lawyers representing BlockFi previously said the firm had $355 million in digital assets stuck on FTX, and loaned $671 million to Alameda.
BlockFi did not immediately respond to Insider's request for comment.
The company has been on a rocky road in the past year. It filed for Chapter 11 bankruptcy protection last November, citing significant exposure to FTX and the now-defunct crypto hedge fund Three Arrows Capital. The crypto lender has over 100,000 creditors, with liabilities and assets ranging from $1 billion to $10 billion.
It's entanglement with FTX began last July, when the company inked a deal with Bankman-Fried's exchange to receive a $400 million revolving credit line as part of a rescue deal. But that deal crumbled after FTX suffered its own liquidity crisis and went bust.
As BlockFi undergoes bankruptcy proceedings, it has sought court approval to pay bonuses to employees. It told the court last November that holding onto key members of staff was critical to its efforts to reorganize the company.
Binance Mistakenly Mixed Crypto Exchange's Customer Funds With B-Token Collateral: Bloomberg
Lyllah Ledesma
Tue, January 24, 2023 at 5:58 AM MST·2 min read
Binance, the world’s largest crypto exchange by trading volume, mistakenly kept collateral for some of the crypto assets it issues in the same wallet as funds belonging to its customers, Bloomberg reported Tuesday, citing an unidentified Binance spokesperson.
The exchange issued 94 so-called Binance-peg tokens (B-Tokens), and reserves for almost half of those are stored in a cold wallet called Binance 8, Bloomberg said. The wallet contains more tokens than required for the number of B-Tokens issued. Since the tokens are supposed to be backed 1:1, the excess indicates the collateral is being mixed with customers’ tokens, according to Bloomberg.
“Collateral assets have previously been moved into this wallet in error and referenced accordingly on the B-Token Proof of Collateral page,” the spokesperson told Bloomberg. “Binance is aware of this mistake and is in the process of transferring these assets to dedicated collateral wallets.” Assets held with the exchange “have been and continue to be backed 1:1,” the spokesperson said.
When collateral is pooled together and used for trading, it’s locked up, and clients or holders of assets may not be able to withdraw if the pool is reduced, Laurent Kssis, a crypto trading adviser at CEC Capital, said in a note to CoinDesk.
“In essence this means that there is no segregation of assets between clients' funds and any collateral used,” Kssis said. “This could lead to the owner(s) not being able to withdraw due to lack of funds or liquidity by the exchange.
“This could resonate like what FTX and Alameda did on a daily basis. An audit would generally highlight such shortcomings and ask to remedy it immediately,” he said. “If Binance was regulated, this would be an essential part of their internal controls.”
Binance has faced scrutiny since the collapse of crypto exchange FTX and FTX's affiliated hedge fund Alameda Research. As a result, Binance sought to boost confidence in its platform by issuing a “proof-of-reserves” report from accounting firm Mazars in December. The report showed that Binance's customer bitcoin (BTC) reserves were overcollateralized.
"To be clear, Binance holds all of its clients’ assets in segregated accounts, which are identified separately from any accounts used to hold assets belonging to Binance," a Binance spokesperson said in an email. "Binance does not invest or otherwise deploy user assets without consent under the terms of specific products."
UPDATE (Jan. 24, 16:22 UTC): Adds Binance comment in last paragraph.
Lyllah Ledesma
Tue, January 24, 2023 at 5:58 AM MST·2 min read
Binance, the world’s largest crypto exchange by trading volume, mistakenly kept collateral for some of the crypto assets it issues in the same wallet as funds belonging to its customers, Bloomberg reported Tuesday, citing an unidentified Binance spokesperson.
The exchange issued 94 so-called Binance-peg tokens (B-Tokens), and reserves for almost half of those are stored in a cold wallet called Binance 8, Bloomberg said. The wallet contains more tokens than required for the number of B-Tokens issued. Since the tokens are supposed to be backed 1:1, the excess indicates the collateral is being mixed with customers’ tokens, according to Bloomberg.
“Collateral assets have previously been moved into this wallet in error and referenced accordingly on the B-Token Proof of Collateral page,” the spokesperson told Bloomberg. “Binance is aware of this mistake and is in the process of transferring these assets to dedicated collateral wallets.” Assets held with the exchange “have been and continue to be backed 1:1,” the spokesperson said.
When collateral is pooled together and used for trading, it’s locked up, and clients or holders of assets may not be able to withdraw if the pool is reduced, Laurent Kssis, a crypto trading adviser at CEC Capital, said in a note to CoinDesk.
“In essence this means that there is no segregation of assets between clients' funds and any collateral used,” Kssis said. “This could lead to the owner(s) not being able to withdraw due to lack of funds or liquidity by the exchange.
“This could resonate like what FTX and Alameda did on a daily basis. An audit would generally highlight such shortcomings and ask to remedy it immediately,” he said. “If Binance was regulated, this would be an essential part of their internal controls.”
Binance has faced scrutiny since the collapse of crypto exchange FTX and FTX's affiliated hedge fund Alameda Research. As a result, Binance sought to boost confidence in its platform by issuing a “proof-of-reserves” report from accounting firm Mazars in December. The report showed that Binance's customer bitcoin (BTC) reserves were overcollateralized.
"To be clear, Binance holds all of its clients’ assets in segregated accounts, which are identified separately from any accounts used to hold assets belonging to Binance," a Binance spokesperson said in an email. "Binance does not invest or otherwise deploy user assets without consent under the terms of specific products."
UPDATE (Jan. 24, 16:22 UTC): Adds Binance comment in last paragraph.
‘Cryptoqueen’ scammed $4 billion from investors by touting bogus Bitcoin rival—she’s still on the run from the FBI after five years
FBI Ruja Ignatova Bulgarian fraudster
Eleanor Pringle
Mon, January 23, 2023
In 2017 Ruja Ignatova - the self-proclaimed 'Cryptoqueen' - boarded a plane in Bulgaria bound for Athens. The fugitive, who is wanted by the FBI, hasn't been seen since.
Ignatova is on the bureau's 'Ten Most Wanted Fugitives' list for "alleged leadership of a massive fraud scheme that affected millions of investors worldwide". A co-founder of Bulgarian-based cryptocurrency company OneCoin Ltd, she is said to have defrauded investors out of more than $4 billion.
It comes after her co-founder, Karl Sebastian Greenwood, plead guilty to wire fraud and money laundering charges in Manhattan federal court last month.
As well as Greenwood, Ignatova brought in her younger brother Konstantin Ignatov to help lead the "international pyramid scheme that involved the marketing of a fraudulent cryptocurrency".
The net began closing in when Konstantin was arrested at Los Angeles International Airport following an investigation by the Manhattan U.S. Attorney in 2019.
Konstantin plead guilty to a range of charges including money laundering and fraud in 2019, according to the BBC.
'Cryptoqueen' still on the run
However, his older sister is still at large, with a federal warrant for Ignatova's arrest issued on October 12, 2017. It was later superseded by a charge in February of 2018 with counts of conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering, conspiracy to commit securities fraud and securities fraud.
Court and public documents allege that Ignatova and her sibling held various positions at the top of the company which was founded in 2014.
As of his arrest, Konstantin Ignatov was described as the "top leader" of the company, having taken over from his sister who had occupied the position until she disappeared in October 2017.
In the course of authorities' investigations into OneCoin, records showed that between the fourth quarter of 2014 and the third quarter of 2016, OneCoin generated €3.353 billion in sales revenue and earned “profits” of €2.232 billion.
How did she do it?
A video shown on the FBI's website gives some insight into how Ignatova swindled investors into putting their hands in their pockets.
At a OneCoin event in London, speaking "one and a half years after launching [their] cryptocurrency" Ignatova said: "I strongly believe [OneCoin] will be the number one cryptocurrency worldwide."
Accepting applause from the crowd, she continues: "In the last two years I've been called a lot of things. The best thing the press called me was: 'OneCoin, who is supposed to be the BitCoin killer'. I must say I like it. You all know since we mined our first coin our growth exploded." She then claims her company had two million active users which "no other cryptocurrency has".
Speaking after Konstantin Ignatov's arrest, the FBI's assistant director-in-charge at the time, William Sweeney Jr., said: “As we allege, OneCoin was a cryptocurrency existing only in the minds of its creators and their co-conspirators. Unlike authentic cryptocurrencies, which maintain records of their investors’ transaction history, OneCoin had no real value.
"It offered investors no method of tracing their money, and it could not be used to purchase anything. In fact, the only ones who stood to benefit from its existence were its founders and co-conspirators. Whether you’re dealing with virtual currency or cold, hard cash, we urge the public to exercise due diligence with any investment.”
According to a release from the Office of the United States Attorneys, Ignatova had listed an exit strategy out of OneCoin as "take the money and run and blame someone else for this".
In emails also sent in 2014, Greenwood apparently refers to OneCoin investors as "idiots" with Ignatov replying: "As you told me, the network would not work with intelligent people."
Where is she now?
And so began an international game of cat and mouse with IRS special agent in charge, John R. Tafur, pledging to "bring cryptocurrency crooks to justice".
The FBI is offering $100,000 for information leading to the arrest of the fugitive.
Her profile on the FBI website adds that she is "believed to travel with armed guards and/or associates" and may have had plastic surgery to alter her appearance.
Able to speak German, English and Bulgarian, it is believed Ignatova may have used a German passport to fly to the United Arab Emirates, Bulgaria, Germany, Russia, Greece and/or Eastern Europe.
When approached by CNN, the bureau declined to provide additional details beyond court documents from the U.S. Department of Justice.
The FBI poster adds that Ignatova has various aliases, including Dr. Ruja Ignatova, Ruja Plamenova Ignatova, Ruja P. Ignatova and "CryptoQueen".
This story was originally featured on Fortune.com
FBI Ruja Ignatova Bulgarian fraudster
Eleanor Pringle
Mon, January 23, 2023
In 2017 Ruja Ignatova - the self-proclaimed 'Cryptoqueen' - boarded a plane in Bulgaria bound for Athens. The fugitive, who is wanted by the FBI, hasn't been seen since.
Ignatova is on the bureau's 'Ten Most Wanted Fugitives' list for "alleged leadership of a massive fraud scheme that affected millions of investors worldwide". A co-founder of Bulgarian-based cryptocurrency company OneCoin Ltd, she is said to have defrauded investors out of more than $4 billion.
It comes after her co-founder, Karl Sebastian Greenwood, plead guilty to wire fraud and money laundering charges in Manhattan federal court last month.
As well as Greenwood, Ignatova brought in her younger brother Konstantin Ignatov to help lead the "international pyramid scheme that involved the marketing of a fraudulent cryptocurrency".
The net began closing in when Konstantin was arrested at Los Angeles International Airport following an investigation by the Manhattan U.S. Attorney in 2019.
Konstantin plead guilty to a range of charges including money laundering and fraud in 2019, according to the BBC.
'Cryptoqueen' still on the run
However, his older sister is still at large, with a federal warrant for Ignatova's arrest issued on October 12, 2017. It was later superseded by a charge in February of 2018 with counts of conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering, conspiracy to commit securities fraud and securities fraud.
Court and public documents allege that Ignatova and her sibling held various positions at the top of the company which was founded in 2014.
As of his arrest, Konstantin Ignatov was described as the "top leader" of the company, having taken over from his sister who had occupied the position until she disappeared in October 2017.
In the course of authorities' investigations into OneCoin, records showed that between the fourth quarter of 2014 and the third quarter of 2016, OneCoin generated €3.353 billion in sales revenue and earned “profits” of €2.232 billion.
How did she do it?
A video shown on the FBI's website gives some insight into how Ignatova swindled investors into putting their hands in their pockets.
At a OneCoin event in London, speaking "one and a half years after launching [their] cryptocurrency" Ignatova said: "I strongly believe [OneCoin] will be the number one cryptocurrency worldwide."
Accepting applause from the crowd, she continues: "In the last two years I've been called a lot of things. The best thing the press called me was: 'OneCoin, who is supposed to be the BitCoin killer'. I must say I like it. You all know since we mined our first coin our growth exploded." She then claims her company had two million active users which "no other cryptocurrency has".
Speaking after Konstantin Ignatov's arrest, the FBI's assistant director-in-charge at the time, William Sweeney Jr., said: “As we allege, OneCoin was a cryptocurrency existing only in the minds of its creators and their co-conspirators. Unlike authentic cryptocurrencies, which maintain records of their investors’ transaction history, OneCoin had no real value.
"It offered investors no method of tracing their money, and it could not be used to purchase anything. In fact, the only ones who stood to benefit from its existence were its founders and co-conspirators. Whether you’re dealing with virtual currency or cold, hard cash, we urge the public to exercise due diligence with any investment.”
According to a release from the Office of the United States Attorneys, Ignatova had listed an exit strategy out of OneCoin as "take the money and run and blame someone else for this".
In emails also sent in 2014, Greenwood apparently refers to OneCoin investors as "idiots" with Ignatov replying: "As you told me, the network would not work with intelligent people."
Where is she now?
And so began an international game of cat and mouse with IRS special agent in charge, John R. Tafur, pledging to "bring cryptocurrency crooks to justice".
The FBI is offering $100,000 for information leading to the arrest of the fugitive.
Her profile on the FBI website adds that she is "believed to travel with armed guards and/or associates" and may have had plastic surgery to alter her appearance.
Able to speak German, English and Bulgarian, it is believed Ignatova may have used a German passport to fly to the United Arab Emirates, Bulgaria, Germany, Russia, Greece and/or Eastern Europe.
When approached by CNN, the bureau declined to provide additional details beyond court documents from the U.S. Department of Justice.
The FBI poster adds that Ignatova has various aliases, including Dr. Ruja Ignatova, Ruja Plamenova Ignatova, Ruja P. Ignatova and "CryptoQueen".
This story was originally featured on Fortune.com
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