Cryptocurrency News

[LFC]

More on the FTX shitshow. This is insane.

FTX failed to keep proper books, records, or security controls for the digital assets it held for customers; used software to “conceal the misuse of customer funds”; and gave special treatment to Alameda, said Ray, adding that “the debtors do not have an accounting department and outsource this function.”

He said the company did not have “an accurate list” of its own bank accounts, or even a complete record of the people who worked for FTX. He added that FTX used “an unsecured group email account” to manage the security keys for its digital assets.

The group’s funds had been used “to purchase homes and other personal items” for staff and advisers, and payments were approved through the use of “personalized emojis” in an online chat, according to Ray.

Ray said that “one of the most pervasive failures” at FTX’s main international exchange was the lack of records about decision-making. He said that Bankman-Fried often used messaging platforms with an auto-delete function “and encouraged employees to do the same.”

Among the assets listed in the document was $4.1 billion of related party loans extended by Alameda, $3.3 billion of which was to Bankman-Fried both personally and to an entity he controlled.

Bankman-Fried previously told the Financial Times that FTX had “accidentally” given $8 billion of FTX customer funds to Alameda.

Ray said that among the core objectives of the bankruptcy proceedings was a “comprehensive, transparent and deliberate investigation into [potential legal] claims against” Bankman-Fried.

Several academic and industry experts have told the FT that creditors may seek to have a “trustee” appointed to take over the management of FTX given the scale of alleged misconduct leading up to the bankruptcy.

Ray added that the fair value of the crypto assets held by the FTX international exchange was a mere $659,000 as of September 30. The filing does not include an estimate of crypto assets owed to customers, but says they are expected to be “significant.”

He said FTX had been able to move $740 million of cryptocurrency to offline “cold” wallets where it could be secured. The company had also suffered a near $400 million hack of crypto just after it filed for bankruptcy.

[jackd]

Considering that the activity is unregulated, it's not insane; it's to be expected. Of course trying to regulate economic activity surrounding the buying and selling of nothing would be difficult.

[goldenvalley]

Nov 17, 2022 18:25:49 GMT jackd said:

Considering that the activity is unregulated, it's not insane; it's to be expected. Of course trying to regulate economic activity surrounding the buying and selling of nothing would be difficult.

This is true for much of the tech world.  The commercial world jumped into the Internet with both feet, creating things like social media etc...all basically unregulated except for some really old law created in the 1920s for broadcast media.  1st Amendment law based on print media...none of it particularly applicable. The government has always lacked foresight on the potential for mischief, fraud, and theft in this technological upheaval and motivation to deal with it.

[andydp]

An acquaintance told me last night "Soros was" behind the BITCOIN crash.  Can anyone find an article to that effect ?

[LFC]

Nov 17, 2022 18:25:49 GMT jackd said:

Of course trying to regulate economic activity surrounding the buying and selling of nothing would be difficult.

Hence the difficulty for several state AGs looking into sales of Taylor Swift concert tickets?

[indy]

What, is $93,000 for a ticket too much?

[LFC]

Nov 18, 2022 15:12:07 GMT indy said:

What, is $93,000 for a ticket too much?

Not even with 93,000 Iranian Rials. At the current exchange rate that's $2.20 to listen to an hour and a half of the dullest, most boring pablum pop music has to offer, and pop has a LOT of pablum to offer.

[indy]

It looks more and more likely that FTX has set off a chain reaction. Other crypto-centric lending firms are looking for emergency funding and/or discussing bankruptcy.

[LFC]

Nov 18, 2022 17:01:30 GMT indy said:

It looks more and more likely that FTX has set off a chain reaction. Other crypto-centric lending firms are looking for emergency funding and/or discussing bankruptcy.

Here's a piece on that very prediction.

Cryptocurrency venture Multicoin Capital has written a letter to its investors about further fall in the business before it could recover.

In the upcoming weeks, the company anticipates that the FTX pandemic will "wipe out" several trading firms, according to a report by CNBC.

"We expect to see contagion fallout from FTX/Alameda over the next few weeks," read the letter.

"Many trading firms will be wiped out and shut down, which will put pressure on liquidity and volume throughout the crypto ecosystem. We have seen several announcements already on this front, but expect to see more."

The company also stated that the funds have dropped by 55 percent this month due to the collapse of FTX and industry-wide price decreases.

And what in the actual hell?

A shocking emergency court filing on Thursday stated that there is evidence suggesting that Bahamian regulators instructed CEO Sam Bankman-Fried to gain "unauthorized access" to FTX systems to obtain the company's digital assets after it had filed for bankruptcy protection.

FTX made the allegations in a motion filed in Delaware's Bankruptcy Court. In that move, FTX claimed that the alleged behavior calls into "serious question" the Bahamian regulators' bid to be recognized as the bankruptcy's liquidators.

[indy]

Yeah, I saw an interview with the CFO of Coinbase who said there was 'small' chance they would be forced into bankruptcy. If he is mentioning it in public at all, it isn't a small chance.

[LFC]

Maybe this is a great time to buy crypto ... if you can find a stable exchange!

[Bact PhD]

Nov 18, 2022 13:42:18 GMT andydp said:

An acquaintance told me last night "Soros was" behind the BITCOIN crash.  Can anyone find an article to that effect ?

Wasn’t it Biden??
In all seriousness, for the last couple weeks I’ve been dealing with a family member (details to be revealed elsewhere) who has gone completely into the Murdochian (and more) rabbit hole. She was yammering something to that effect, that the Democratic Party was in up to its neck, yada, yada…

[LFC]

Nov 23, 2022 18:37:55 GMT Bact PhD said:

Wasn’t it Biden??

I doubt it. He's a blithering idiot incapable of rational thought. It must be the Deep State, the same Deep State that's propping Biden up and using him as a puppet.

It's sad to think there are entire rooms filled with people you could say that to who would simply nod their heads in agreement, mouths agape, of course.

[LFC]

Another crypto company circling the drain?

Anti-woke cryptocurrency exchange Kraken will cut 30 percent of its staff as the company weathers the “crypto winter,” CEO Jesse Powell said in a blog post. The company agreed to pay a $360,000 fine earlier this week in a settlement with the U.S. Department of the Treasury over allegations the company violated sanctions against Iran. The cuts will leave 1100 employees jobless as the crypto industry faces a murky and volatile future. The company had announced plans in June to hire 500 new employees who aligned with its “crypto-first culture, ” which consists of workplace rules such as not calling “someone’s words toxic, hateful, racist, x-phobic, unhelpful, etc.” Powell had also boasted to Fox Business Network about firing “woke” employees. “I’m confident the steps we are taking today will ensure we can continue to deliver on our mission which the world needs now more than ever before,” he said in his latest blog post. “I remain extremely bullish on crypto and Kraken.” The cuts come on the heels of the FTX collapse that has shaken the industry, leaving several firms in financial ruin.

[LFC]

Crypto continues to be a bigger risk than people thought. You can't trust that the brokers and exchanges function reasonably well, on top of the already high risk of the investments instruments themselves.

Splits between U.S. Department of Justice prosecutors are delaying the conclusion of a long-running criminal investigation into the world's largest cryptocurrency exchange Binance, four people familiar with the matter have told Reuters.

The investigation began in 2018 and is focused on Binance's compliance with U.S. anti-money laundering laws and sanctions, these people said. Some of the at least half dozen federal prosecutors involved in the case believe the evidence already gathered justifies moving aggressively against the exchange and filing criminal charges against individual executives including founder Changpeng Zhao, said two of the sources. Others have argued taking time to review more evidence, the sources said.

The inquiry involves prosecutors at three Justice Department offices: the Money Laundering and Asset Recovery Section, known as MLARS, the U.S. Attorney's Office for the Western District of Washington in Seattle and the National Cryptocurrency Enforcement Team. Justice Department regulations say that money laundering charges against a financial institution must be approved by the MLARS chief. Leaders from the other two offices, along with higher-level DOJ officials, would likely also have to sign off on any action against Binance, three of the sources said.

[LFC]

Arrested!

The testimony that Sam Bankman-Fried intended to give to Congress on Tuesday—if he hadn’t been arrested in the Bahamas the night before—was leaked to Forbes on Tuesday morning. First thing’s first, he offers some accountability: “I would like to start by formally stating, under oath: I fucked up,” the planned testimony began. But the crypto fraudster’s moment of accountability was only a moment, as he planned to quickly shift toward blaming FTK’s Chapter 11 team, saying he was unable to access his data and wouldn’t be able to deliver a “confident and detailed” testimony. “I have offered, many times, to help the Chapter 11 team,” the transcript reads. “I have not received responses to those offers, or to any other messages I have sent them.” The lengthy testimony included seven pages of debunking supposed “misstatements” made by others, and a long list of things he didn’t do, including creating a hard partying culture at PTK. It was just dinner and board games! The fallen crypto wunderkind is expected to be extradited back to the U.S as he faces criminal charges.

I don't get it. It was such a well run company. The money was so well handled.

Sam Bankman-Fried, the disgraced founder of crypto exchange FTX, took multiple personal loans totaling a billion dollars or more from his trading company, Alameda Research, FTX’s new CEO testified before Congress Tuesday.

Bankman-Fried, who was arrested Monday on charges of wire fraud, conspiracy to defraud the United States, and more, told regulators he re-invested the money back into the exchange. But Ray says there is no documentation of what the loans were for or how they were used.

In at least one case, Ray said, Bankman-Fried signed the loan as both the issuer and recipient.

And its accounting IT software was best in class.

Ray expressed astonishment that there was “no record-keeping whatsoever” at the business. Employees passed along invoices and expenses via Slack as opposed to a formal process, he said, and the multibillion-dollar operation used QuickBooks to manage its finance. Meanwhile, Ray continued, there was no independent board to serve as a watchdog.

Contrary to Bankman-Fried's own representations, Ray alleged there was virtually no separation in the leadership between FTX, its U.S. arm, and the trading firm. The CEO claimed there was “virtually no distinction whatsoever” between the leadership of the three entities, and that the owners could “run free rein” among all of them.

[andydp]

As always Borowitz has called it:

World Shocked that Man Running Business Based on Imaginary Money Might be a Fraud

[LFC]

FTX hid $8 BILLION in liabilities in a fake customer account. WTF, dudes? Did you have any sort of exit plan other than jail?

A lawsuit filed by the Commodity Futures Trading Commission on December 13 states that Bankman-Fried directed FTX executives to move Alameda's approximately $8 billion in liabilities to an unknown customer account on FTX's systems. 

The lawsuit also claimed that Bankman-Fried would later refer to that account as "our Korean friend's account" and/or "the weird Korean account." It added that although it was a sub-account of Alameda, it did not have the typical investment firm's email identifier "@alameda-research.com." Notes tied to the account labeled it as "FTX fiat old."

The suit claims that this helped mask Alameda's negative balance on FTX. However, the account had the same privileges as those of Alameda accounts, including exemption from liquidation characteristics. 

A day later, on December 14, Bloomberg reported that a GitHub account under the name Nishad Singh, FTX's former engineering director, created a code that would conceal Alameda's ballooning liabilities on the exchange. 

[goldenvalley]

Dec 27, 2022 23:04:03 GMT LFC said:

FTX hid $8 BILLION in liabilities in a fake customer account. WTF, dudes? Did you have any sort of exit plan other than jail?

A lawsuit filed by the Commodity Futures Trading Commission on December 13 states that Bankman-Fried directed FTX executives to move Alameda's approximately $8 billion in liabilities to an unknown customer account on FTX's systems. 

The lawsuit also claimed that Bankman-Fried would later refer to that account as "our Korean friend's account" and/or "the weird Korean account." It added that although it was a sub-account of Alameda, it did not have the typical investment firm's email identifier "@alameda-research.com." Notes tied to the account labeled it as "FTX fiat old."

The suit claims that this helped mask Alameda's negative balance on FTX. However, the account had the same privileges as those of Alameda accounts, including exemption from liquidation characteristics. 

A day later, on December 14, Bloomberg reported that a GitHub account under the name Nishad Singh, FTX's former engineering director, created a code that would conceal Alameda's ballooning liabilities on the exchange. 

He is a  genius!  He'll figure it out with some effective altruism...which apparently means line his pockets with fancy real estate in the Bahamas.

[LFC]

SBF's proclamations of innocence are falling flatter with each news cycle. No wonder the Feds just grabbed him instead of waiting for him to turn himself in. He has a lot of reasons to become a fugitive.

In Sam Bankman-Fried’s quest to keep his cryptocurrency empire looking profitable, the disgraced founder of FTX often promoted newfangled digital currencies that crypto aficionados came to call “Samcoins.”

Mr. Bankman-Fried wooed the developers of these new coins with names like Serum and Maps, insisting that they make their trading debuts on the FTX exchange. Then his hedge fund, Alameda Research, would buy some of these newly listed Samcoins to prop up their value, while Mr. Bankman-Fried used FTX’s influence in the crypto industry to drum up interest in those coins and persuade other investors to also buy significant amounts.

Mr. Bankman-Fried was thus able to inflate the coins’ value artificially, making Alameda look healthier than it was and papering over problems at his companies until they imploded in November.

The collapse of FTX and Alameda triggered criminal charges against Mr. Bankman-Fried over his mismanagement of the two firms, and has spotlighted his broader crypto dealings, including the aggressive trading practices he orchestrated for Alameda’s benefit.

His promotion of so-called Samcoins was a big part of those practices.

Graham Friedman, director at Republic Crypto, a digital asset strategy company, said it was easy to identify which coins were Samcoins. “It was any project whose value proposition was reliant on FTX and their success.”

[LFC]

FTX may end up taking down a nice sized chunk of the crypto trading market down with it.

Cryptocurrency lender Genesis Global Capital is planning to file for bankruptcy as soon as this week, Bloomberg News reported on Wednesday, citing people with knowledge of the situation.

A bankruptcy filing has been expected for weeks, after the company froze customer redemptions on Nov. 16 following the downfall of major cryptocurrency exchange FTX.

The collapse of FTX in November has claimed several victims including crypto lender BlockFi and Core Scientific Inc , one of the biggest publicly traded crypto mining companies in the United States, both of which filed for bankruptcy protection in the following months.

[andydp]

Jan 19, 2023 16:59:20 GMT LFC said:

FTX may end up taking down a nice sized chunk of the crypto trading market down with it.

Cryptocurrency lender Genesis Global Capital is planning to file for bankruptcy as soon as this week, Bloomberg News reported on Wednesday, citing people with knowledge of the situation.

A bankruptcy filing has been expected for weeks, after the company froze customer redemptions on Nov. 16 following the downfall of major cryptocurrency exchange FTX.

The collapse of FTX in November has claimed several victims including crypto lender BlockFi and Core Scientific Inc , one of the biggest publicly traded crypto mining companies in the United States, both of which filed for bankruptcy protection in the following months.

According to some of my friends, Soros did this.

[indy]

Genesis filed for bankruptcy last night.

[LFC]

Meanwhile there's a gas station near my home (yes, a f***ing GAS station and a barely useful convenience store) that sells Bitcoin. Just ... wow.

[pnwguy]

Jan 20, 2023 15:45:18 GMT LFC said:

Meanwhile there's a gas station near my home (yes, a f***ing GAS station and a barely useful convenience store) that sells Bitcoin. Just ... wow.

Do they carry any Magic Beans you can trade for a cow?