CRIMINAL CRYPTO CAPITALI$M
FTX’s Former Engineering Chief Nishad Singh
Looking for Deal From Feds: Report
Another one of Sam Bankman-Fried’s former confidants and roommates is said to be engaging with the U.S. Attorney’s Office in the Southern District of New York with the hope of getting a plea agreement, according to a report from Bloomberg.
Nishad Singh, FTX’s former director of engineering, and a housemate of Bankman-Fried, is said to have met with prosecutors in a "proffer session." Such meetings often include an offer of "limited immunity" to encourage the interviewee to speak freely. Singh has not been accused of wrongdoing.
Former Alameda Research CEO Caroline Ellison and former FTX CTO Gary Wang have both pleaded guilty to fraud charges.
Central to Singh’s deal is information on FTX’s and Bankman-Fried’s large donations to various political campaigns, according to Bloomberg, citing people familiar with the matter.
Singh personally has donated more than $9.3 million to Democratic party-aligned initiatives since 2020. In April 2021, the political action committee Mind The Gap, founded by Bankman-Fried's mother, received a $1 million donation from Singh.
According to court documents from November, Singh received $543 million in loans from Alameda Research. The former FTX affiliate is recorded as granting $4.1 billion in loans to related parties.
Camomile Shumba
Mon, January 9, 2023
The U.S. Department of Justice (DOJ) has seized more than 55 million shares of Robinhood (HOOD) stock owned – via a holding company – by Sam Bankman-Fried and FTX co-founder Gary Wang, according to a court document. The shares were worth just over $456 million based on HOOD's closing price of $8.25 on Friday.
The stock had been held at an account at U.K.-based brokerage ED&F Man.
The "seized Assets constitute property involved in violations" of crimes such as money laundering and wire fraud reads the court document. Sam Bankman-Fried was formally charged with those and other crimes on Dec. 13.
The Robinhood shares were in principle owned by FTX co-founders Bankman-Fried and Gary Wang through their Emergent Fidelity Technologies holding company. FTX, now run by John Ray III, had asked a judge late last month to freeze the stock. Bankman-Fried naturally opposed the move, saying, in part, he needed the shares to help pay his legal fees.
The U.S. government said it was in the process of seizing a number of assets potentially linked to FTX on Wednesday.
Crypto Exchange Huobi Has Bad News
The platform, which is headquartered in the Seychelles, is one of the latest victims of the crisis affecting the sector over the last year.
LUC OLINGA
JAN 7, 2023 9:54 AM EST
This is bad news that the cryptocurrency industry could have done without.
The latest episode suggests that the very difficult period that the young Blockchain-powered financial services industry is going through is far from over.
The cryptocurrency exchange Huobi has just announced a 20% reduction in its workforce in a general move to reduce costs to cope with the fall in cryptocurrency prices.
"With the current state of the bear market, a very lean team will be maintained going forward," the Huobi spokesperson told news agency Reuters.
The company employed some 1,600 people at the end of October. However, it is difficult to say exactly the number of jobs that will be eliminated because no recent figures are available.
Huobi Token Impacted
Huobi, which is based in the Seychelles, is one of the largest cryptocurrency exchanges. According to data firm CoinGecko, the platform recorded about $318 million of trading volumes in the last 24 hours.
The announcement of the workforce reductions has impacted HT, the native token or the cryptocurrency issued by the Huobi ecosystem. HT is down 7% in the last seven days.
The firm had been founded in China in 2013 but had to go into exile after Beijing launched a crackdown against the crypto industry. As a result, Huobi now only has its consulting and research activities in mainland China while trading activities are outside the country. It has offices n Hong Kong, South Korea, Japan and the U.S.
The company is owned by About Capital Management, a Hong Kong-based asset management firm.
Huobi is, like all cryptocurrency exchanges, the subject of doubts and mistrust about its solidity after the unexpected bankruptcy of FTX. Considered one of the strongest firms in the crypto space after a valuation of $32 billion in February, FTX, founded by Sam Bankman-Fried, went bankrupt on Nov. 11 when it was unable to meet the massive withdrawal requests of its customers.
Since then, a scent of suspicion has surrounded the rest of the exchanges. Binance, the world's largest cryptocurrency exchange, was the subject of many rumors in December, leading to panicked customers to withdraw $6 billion from Dec. 12 to Dec. 14, a spokesperson told TheStreet at the time.
Worries of Wash Trades
These suspicions had been reinforced by the decision of the audit firm Mazars to cut ties with all crypto firms.
Mazars said in December that it "paused its activity relating to the provision of proof of reserves reports for entities in the cryptocurrency sector due to concerns regarding the way these reports are understood by the public.”
The objective of the proof of reserves audit is to show that the crypto firm has enough reserves to deal with a run on it from its clients and investors. This audit is also intended to increase public trust and demonstrate transparency when most crypto firms are unregulated, which means that they are opaque and investors and clients can only rely on what the top executives say.
Billionaire Mark Cuban has further warned in an interview with TheStreet of a possible implosion of the illegal practice of washing trades which is expected to significantly affect centralized exchanges.
"I think the next possible implosion is the discovery and removal of wash trades on central exchanges," the owner of the Dallas Mavericks told TheStreet in an interview by email. "There are supposedly tens of millions of dollars in trades and liquidity for tokens that have very little utilization. I don't see how they can be that liquid."
A wash trade, an illegal practice, consists of creating artificial interest around a financial product -- a crypto token or coin in this case -- to make a profit. This form of "pump-and-dump" scheme is widespread in the cryptocurrency industry.
While many wash trades have occurred in traditional finance, the crypto space is particularly conducive to the practice because nearly 13,000 cryptocurrencies are listed, according to data firm CoinGecko. Scammers have to make one or another token stand out from that pack so they can engage in wash trade.
As an example, according to a 2022 study by Forbes magazine on 157 centralized cryptocurrency exchanges, more than half the volumes of exchanges concerning bitcoin are fake.
The platform, which is headquartered in the Seychelles, is one of the latest victims of the crisis affecting the sector over the last year.
LUC OLINGA
JAN 7, 2023 9:54 AM EST
This is bad news that the cryptocurrency industry could have done without.
The latest episode suggests that the very difficult period that the young Blockchain-powered financial services industry is going through is far from over.
The cryptocurrency exchange Huobi has just announced a 20% reduction in its workforce in a general move to reduce costs to cope with the fall in cryptocurrency prices.
"With the current state of the bear market, a very lean team will be maintained going forward," the Huobi spokesperson told news agency Reuters.
The company employed some 1,600 people at the end of October. However, it is difficult to say exactly the number of jobs that will be eliminated because no recent figures are available.
Huobi Token Impacted
Huobi, which is based in the Seychelles, is one of the largest cryptocurrency exchanges. According to data firm CoinGecko, the platform recorded about $318 million of trading volumes in the last 24 hours.
The announcement of the workforce reductions has impacted HT, the native token or the cryptocurrency issued by the Huobi ecosystem. HT is down 7% in the last seven days.
The firm had been founded in China in 2013 but had to go into exile after Beijing launched a crackdown against the crypto industry. As a result, Huobi now only has its consulting and research activities in mainland China while trading activities are outside the country. It has offices n Hong Kong, South Korea, Japan and the U.S.
The company is owned by About Capital Management, a Hong Kong-based asset management firm.
Huobi is, like all cryptocurrency exchanges, the subject of doubts and mistrust about its solidity after the unexpected bankruptcy of FTX. Considered one of the strongest firms in the crypto space after a valuation of $32 billion in February, FTX, founded by Sam Bankman-Fried, went bankrupt on Nov. 11 when it was unable to meet the massive withdrawal requests of its customers.
Since then, a scent of suspicion has surrounded the rest of the exchanges. Binance, the world's largest cryptocurrency exchange, was the subject of many rumors in December, leading to panicked customers to withdraw $6 billion from Dec. 12 to Dec. 14, a spokesperson told TheStreet at the time.
Worries of Wash Trades
These suspicions had been reinforced by the decision of the audit firm Mazars to cut ties with all crypto firms.
Mazars said in December that it "paused its activity relating to the provision of proof of reserves reports for entities in the cryptocurrency sector due to concerns regarding the way these reports are understood by the public.”
The objective of the proof of reserves audit is to show that the crypto firm has enough reserves to deal with a run on it from its clients and investors. This audit is also intended to increase public trust and demonstrate transparency when most crypto firms are unregulated, which means that they are opaque and investors and clients can only rely on what the top executives say.
Billionaire Mark Cuban has further warned in an interview with TheStreet of a possible implosion of the illegal practice of washing trades which is expected to significantly affect centralized exchanges.
"I think the next possible implosion is the discovery and removal of wash trades on central exchanges," the owner of the Dallas Mavericks told TheStreet in an interview by email. "There are supposedly tens of millions of dollars in trades and liquidity for tokens that have very little utilization. I don't see how they can be that liquid."
A wash trade, an illegal practice, consists of creating artificial interest around a financial product -- a crypto token or coin in this case -- to make a profit. This form of "pump-and-dump" scheme is widespread in the cryptocurrency industry.
While many wash trades have occurred in traditional finance, the crypto space is particularly conducive to the practice because nearly 13,000 cryptocurrencies are listed, according to data firm CoinGecko. Scammers have to make one or another token stand out from that pack so they can engage in wash trade.
As an example, according to a 2022 study by Forbes magazine on 157 centralized cryptocurrency exchanges, more than half the volumes of exchanges concerning bitcoin are fake.
BlockFi says it repaid investor $15 million to settle over crypto crash
Mon, January 9, 2023
By Dietrich Knauth
(Reuters) - Executives of bankrupt crypto lender BlockFi Inc have repaid an investor $15 million to settle a threatened lawsuit over the company's cratering equity value in summer 2022, the company's attorneys said Monday in bankruptcy court.
The settlement resolved claims by the investor, identified only as "Counterparty A," who had purchased equity shares that were issued as part of executive compensation packages, BlockFi attorney Joshua Sussberg said at a bankruptcy court hearing in Trenton, New Jersey.
The shares were sold at a discount to the company's January 2022 valuation of $6 billion to $8 billion, but their value plummeted over the summer as the collapse of two cryptocurrencies caused widespread havoc in crypto markets.
The BlockFi investor threatened to sue, alleging that BlockFi and its executives should have been more transparent about contagion risks in the cryptocurrency market, according to Sussberg.
BlockFi believed the investor's claims were "specious," but it reached a confidential settlement on Aug. 23 under which BlockFi executives repaid $15 million to the investor, Sussberg said.
The largest payment under that settlement was made by BlockFi founder Zac Prince, who repaid $6.144 million.
BlockFi's dramatic decline in value was made apparent by an emergency loan extended by crypto exchange FTX on July 1. That loan gave FTX an option to buy BlockFi for $240 million, essentially setting a maximum value for existing equity.
As the company's value plummeted, BlockFi laid off 20% of its employees. BlockFi will soon seek court approval of an employee bonus package intended to keep remaining staff from fleeing during its bankruptcy and to compensate employees who had previously received company equity as part of their pay, Sussberg said.
FTX's buyout price meant that Prince's equity stake lost $412.82 million in value, and caused him to miss out on a planned $600,000 bonus payment, Sussberg said. Prince and other executives will not be included in BlockFi's upcoming employee retention plan.
New Jersey-based BlockFi filed for bankruptcy protection on Nov. 28, a direct casualty of FTX's collapse weeks earlier. FTX founder Sam Bankman-Fried has since been arrested on fraud charges and he has pleaded not guilty.
BlockFi and FTX have been embroiled in a dispute over $465 million shares of online broker Robinhood Markets Inc that BlockFi claimed as collateral on an unpaid debt owed to it by FTX affiliate Alameda Research. That dispute further complicated when the U.S. Department of Justice seized the shares, and a BlockFi attorney said Monday that DOJ was in the process of seizing assets held by two or three BlockFi customers based in Washington state.
(Reporting by Dietrich Knauth in New York, Editing by Alexia Garamfalvi and David Gregorio)
Mon, January 9, 2023
By Dietrich Knauth
(Reuters) - Executives of bankrupt crypto lender BlockFi Inc have repaid an investor $15 million to settle a threatened lawsuit over the company's cratering equity value in summer 2022, the company's attorneys said Monday in bankruptcy court.
The settlement resolved claims by the investor, identified only as "Counterparty A," who had purchased equity shares that were issued as part of executive compensation packages, BlockFi attorney Joshua Sussberg said at a bankruptcy court hearing in Trenton, New Jersey.
The shares were sold at a discount to the company's January 2022 valuation of $6 billion to $8 billion, but their value plummeted over the summer as the collapse of two cryptocurrencies caused widespread havoc in crypto markets.
The BlockFi investor threatened to sue, alleging that BlockFi and its executives should have been more transparent about contagion risks in the cryptocurrency market, according to Sussberg.
BlockFi believed the investor's claims were "specious," but it reached a confidential settlement on Aug. 23 under which BlockFi executives repaid $15 million to the investor, Sussberg said.
The largest payment under that settlement was made by BlockFi founder Zac Prince, who repaid $6.144 million.
BlockFi's dramatic decline in value was made apparent by an emergency loan extended by crypto exchange FTX on July 1. That loan gave FTX an option to buy BlockFi for $240 million, essentially setting a maximum value for existing equity.
As the company's value plummeted, BlockFi laid off 20% of its employees. BlockFi will soon seek court approval of an employee bonus package intended to keep remaining staff from fleeing during its bankruptcy and to compensate employees who had previously received company equity as part of their pay, Sussberg said.
FTX's buyout price meant that Prince's equity stake lost $412.82 million in value, and caused him to miss out on a planned $600,000 bonus payment, Sussberg said. Prince and other executives will not be included in BlockFi's upcoming employee retention plan.
New Jersey-based BlockFi filed for bankruptcy protection on Nov. 28, a direct casualty of FTX's collapse weeks earlier. FTX founder Sam Bankman-Fried has since been arrested on fraud charges and he has pleaded not guilty.
BlockFi and FTX have been embroiled in a dispute over $465 million shares of online broker Robinhood Markets Inc that BlockFi claimed as collateral on an unpaid debt owed to it by FTX affiliate Alameda Research. That dispute further complicated when the U.S. Department of Justice seized the shares, and a BlockFi attorney said Monday that DOJ was in the process of seizing assets held by two or three BlockFi customers based in Washington state.
(Reporting by Dietrich Knauth in New York, Editing by Alexia Garamfalvi and David Gregorio)
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