Crypto News Headlines (18-Nov-2022)

Following the collapse of FTX and Alameda Research, crypto trading platforms are rushing to show that clients’ assets are safe and not being used for speculation, but “proof of reserves, at least in the form they’ve been suggested, have too many shortcomings to inspire confidence,” Bank of America (BAC) said in a research report Thursday.

The bank notes that many exchanges have already reported, or are planning to report, their assets through proof of reserves using Merkle Trees. These are efficient data structures called “hash trees” that can be securely verified. They behave as a map of customers’ funds and work even when reserves become complicated.

The Singapore government’s Temasek Holdings issued a statement regarding its investments in FTX Thursday after the cryptocurrency exchange filed for bankruptcy.

Temasek is a global investment company headquartered in Singapore with a portfolio valued at $403 billion Singapore dollars (US$294 billion). Temasek was established to own and manage the assets previously held by the Singapore government; the government is the sole equity shareholder of Temasek.

The investment firm explained:

We invested US$210 million for a minority stake of ~1% in FTX International, and invested US$65 million for a minority stake of ~1.5% in FTX US, across 2 funding rounds from October 2021 to January 2022. The cost of our investment in FTX was 0.09% of our net portfolio value of S$403 billion as of 31 March 2022.

Crypto lender Genesis tried to raise a $1 billion loan from investors to avoid a “liquidity crunch” driven by the fallout from crypto exchange FTX’s collapse, according to a Wall Street Journal report.

The firm said that it needed the credit by 10 am by this past Monday, but it didn’t get it.

On Wednesday morning, Genesis then announced it would suspend withdrawals from its lending arm, blaming FTX’s collapse for “abnormal withdrawal requests which have exceeded our current liquidity.”

“There is an ongoing run on deposits driven mainly by retail programs and partners of Genesis (i.e., Gemini Earn) and institutional clients testing liquidity,” the document said.

According to Korean media, Terra’s co-founder Daniel Shin appeared before the prosecution on the 17th and claimed that he had a significant amount of stock as it was at the time of the incident and the selling at a high price is not true.

Before that, he is said to have sold over 70% of his LUNA tokens before its price skyrocketed and held a significant amount of LUNA during the crash of the Terra stablecoin and the LUNA token in May. No details were given about the gains or losses realized.

South Korean prosecutors on Monday said they had subpoenaed Shin based on allegations that he made a profit of 140 billion won (approximately $104 million) by selling off pre-issued LUNA without does not disclose accurate information.

In the latest development, El Salvador Nayib Bukele announced that they will resume their Crypto scammers have been accessing a “cheap and easy” black market of individuals willing to put their name and face on fraudulent projects — all for the low price of $8.00, blockchain security firm CertiK has uncovered. 

These individuals, described by CertiK as “Professional KYC actors,” would, in some cases, voluntarily become the verified face of a crypto project, gaining trust in the crypto community prior to an “insider hack or exit scam.”

Other uses of these Know Your Customers (KYC) actors include using their identities to open up bank or exchange accounts on behalf of the bad actors.

According to a Nov. 17 blog post, CertiK analysts were able to find over 20 underground marketplaces hosted on Telegram, Discord, mobile apps and gig websites to recruit KYC actors for as low as $8.00 for simple “gigs” like passing the KYC requirements “to open a bank or exchange account from a developing country.”

Bitcoin was trading sideways Thursday, despite a growing rush of companies admitting exposure to embattled crypto exchange FTX and its sibling company, Alameda Research.

On Wednesday, the lending arm of Genesis Global Capital joined the list of firms caught in FTX fallout as it halted customer withdrawals. In a call with customers, Genesis Interim CEO Derar Islim connected the firm’s decision to FTX’s collapse.

Bitcoin (BTC) was recently trading at around $16,600, little changed over the past 24 hours. The largest cryptocurrency by market capitalization hovered over its latest $16,000 support for a ninth consecutive day. BTC dropped below its previous $19,000 support as the first threads of Sam Bankman Fried’s FTX empire began unraveling.(Genesis owner Digital Currency Group (DCG) is also the parent company of CoinDesk.)

Senator Cynthia Lummis (R-WY) explained in a series of tweets Monday why the collapsed cryptocurrency exchange FTX wouldn’t have gone bankrupt had Congress passed her crypto bill. The cryptocurrency trading platform filed for bankruptcy last week.

The senator from Wyoming has been a supporter of bitcoin for quite some time. She personally owns BTC and believes that bitcoin is something that the Federal Reserve should hold on its balance sheet. She has said repeatedly that the cryptocurrency is an excellent store of value.

She tweeted Monday:

The FTX bankruptcy wouldn’t happen under the Lummis-Gillibrand bill.

Solana NFT protocol maker Metaplex announced on Thursday that it has undergone a company-wide round of layoffs, as the contagion induced by crypto exchange FTX’s collapse last week continues to spread across the Web3 ecosystem. 

An undisclosed number of Metaplex employees were pink-slipped today due to worsening market conditions for crypto generally, and for Solana particularly, the company’s co-founder and CEO Stephen Hess announced today in a tweet.

Emurgo, the official commercial arm and a founding entity of the Cardano blockchain, plans to launch USDA, a U.S.-pegged stablecoin, in early 2023, the company told CoinDesk.

USDA will be the first fully fiat-backed, regulatory-compliant stablecoin in the Cardano ecosystem.

“The introduction of a fully fiat-backed, regulatory-compliant stablecoin is the next step in realizing the future for our community,” wrote Emurgo Fintech Managing Director Vineeth Bhuvanagiri, in a note to CoinDesk.

Stablecoins are tokens backed by an asset, or a basket of assets, and pegged to fiat currency, such as the U.S. dollar. They serve as an entryway to the crypto market for traditional market participants and are extensively used within the ecosystem as instruments for trading, borrowing, and lending.

company revealed the news about its Spanish license on Nov. 17. The approval from the Bank of Spain lets Bitstamp’s local subsidiary offer virtual currency exchange services for fiat currency and electronic wallet custody services to Spanish users. Bitstamp became the 46th virtual asset provider to receive a license in Spain, following the likes of Binance and Bitpanda.

Spain has recently demonstrated a moderate approach to crypto regulation, which goes hand in hand with a high pace of adoption in the country. In January, the local financial regulator Comisión Nacional del Mercado de Valores (CNMV) announced a set of rules for crypto-asset investments advertising, demanding them to be “clear, balanced and fair.”