Thu, January 5, 2023
(Reuters) - After the collapse of major cryptocurrency exchange FTX, the industry has felt a ripple effect due to the exposure of many companies to FTX and its affiliated trading firm Alameda Research. FTX founder Sam Bankman-Fried on Jan. 3 pleaded not guilty to criminal charges that he cheated investors and caused billions of dollars in losses.
Here are some firms that have given information about their exposure to FTX.
BLOCKFI
BlockFi filed for bankruptcy on Nov. 28, weeks after the crypto lender said it was pausing client withdrawals. In July, FTX had signed a deal with an option to buy BlockFi for up to $240 million.
GENESIS
Genesis is working to preserve client assets and strengthen liquidity, it said in a letter to clients in December, adding that it would take "weeks rather than days" to form a plan.
The crypto lending arm of U.S. digital asset broker Genesis Trading suspended customer redemptions last month, citing the sudden failure of FTX.
Genesis said in a tweet on Nov. 10 that its derivatives business has approximately $175 million in locked funds on FTX.
However, Genesis had no material exposure to FTX's native token FTT, or any other tokens issued by centralized exchanges, the firm said in a tweet on Nov. 9.
BINANCE
Binance Chief Executive Changpeng Zhao sparked concerns among investors on Nov. 6 when he said in a tweet that the crypto exchange would sell its holdings of FTT.
Zhao told a Twitter spaces event that Binance had previously held $580 million worth of FTT, of which "we only sold quite a small portion, we still hold a large bag."
Binance said on Nov. 13 that it had stopped accepting deposits of FTX's FTT token on its platform, urging other rival exchanges to do the same.
CELSIUS NETWORK
New York's attorney general filed a civil lawsuit accusing Celsius Network founder Alex Mashinsky of scheming to defraud hundreds of thousands of investors by inducing them to deposit billions of dollars in digital assets with his cryptocurrency company.
Between 2020 and 2022, under Mashinsky’s watch, Celsius made loans totaling roughly a billion dollars to Alameda Research, according to a filing.
COINBASE
Coinbase Global Inc said in a blog post on Nov. 8 that it had $15 million worth of deposits on FTX. It said it had no exposure to FTT or Alameda Research and no loans to FTX.
COINSHARES
Crypto asset manager CoinShares has $30.3 million worth of exposure to crypto exchange FTX, it said in a statement on Nov. 10.
CoinShares CEO Jean-Marie Mognetti said the group's financial health remains "strong."
CRYPTO.COM
Singapore-based crypto exchange Crypto.com said on Nov. 14 it had moved about $1 billion to FTX over the course of a year, but most of it was recovered and exposure at the time of FTX's collapse was less than $10 million.
CEO Kris Marszalek said the firm would prove wrong all naysayers who thought the platform was in trouble, adding it had a robust balance sheet and took no risks.
GALAXY DIGITAL
Crypto financial services company Galaxy Digital Holdings Ltd said in its third-quarter earnings statement on Nov. 9 - the day after FTX froze withdrawals - that it had $76.8 million worth of exposure to FTX, of which $47.5 million was "in the withdrawal process."
GALOIS CAPITAL
Hedge fund Galois Capital had half its assets trapped on FTX, co-founder Kevin Zhou told investors in a recent letter, the Financial Times reported on Nov. 11, estimating the amount to be around $100 million.
The firm on Nov. 13 confirmed that it had up to $45 million in exposure to the now collapsed FTX cryptocurrency exchange, Bloomberg News reported.
KRAKEN
Cryptocurrency exchange Kraken said on Nov. 10 that it held about 9,000 FTT tokens on the FTX exchange and was not affected "in any material way".
SILVERGATE CAPITAL CORP
Silvergate Capital Corp reported a sharp drop in fourth-quarter crypto-related deposits as investors spooked by FTX's collapse pulled out more than $8 billion in deposits.
The company said on Nov. 11 FTX represented less than 10% of $11.9 billion in deposits from all digital asset customers as of Sept. 30.
The financial solutions provider to digital assets also said Silvergate has no outstanding loans or investments in FTX.
VOYAGER DIGITAL
Bankrupt crypto lender Voyager Digital, which was set to sell its assets to FTX after a $1.42 billion deal bid by the exchange in September, had a balance of approximately $3 million at FTX.
GRAYSCALE
Crypto asset manager Grayscale, whose flagship Grayscale Bitcoin Trust (GBTC) is the world's largest bitcoin fund, told investors that the recent market events have had no impact on its product operations or the security of the holdings in its funds.
(Reporting by Elizabeth Howcroft in London, Mehnaz Yasmin, Medha Singh Niket Nishant, and Manya Saini in Bengaluru and Hannah Lang in Washington; Editing by Jan Harvey and Matthew Lewis)
U.S. prosecutors launch website for Bankman-Fried alleged fraud victims
Fri, January 6, 2023
By Luc Cohen
NEW YORK (Reuters) - The U.S. government plans to launch a website for victims of FTX cryptocurrency exchange founder Sam Bankman-Fried's alleged fraud to communicate with law enforcement.
In court papers filed on Friday, federal prosecutors in Manhattan asked U.S. District Judge Lewis Kaplan for permission to use the website to notify victims, rather than contacting each individually.
FTX could owe money to more than 1 million people, making it "impracticable" to contact each, the papers said.
Federal law requires prosecutors to contact possible crime victims to inform them of their rights, including the rights to obtain restitution, be heard in court and be protected from defendants.
Kaplan has yet to rule on the request, but the website had gone live by Friday afternoon.
"If you believe that you may have been a victim of fraud by Samuel Bankman-Fried, A/K/A/ 'SBF,' please contact the victim/witness coordinator at the United States Attorney's office," the website read.
The U.S. Attorney's office in Manhattan did not immediately respond to a request for comment.
Bankman-Fried, 30, has pleaded not guilty to eight counts of wire fraud and conspiracy over November's collapse of FTX.
Prosecutors have said he stole billions in FTX customer deposits to pay debts for his hedge fund, Alameda Research, and lied to investors about FTX's financial condition.
The onetime billionaire has acknowledged risk management shortcomings, but said he did not consider himself criminally liable.
Bankman-Fried's lawyers did not immediately respond to a request for comment on Friday.
(Reporting by Luc Cohen in New York Editing by Leslie Adler)
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