“The lending arm of crypto investment bank Genesis Global Trading is temporarily suspending redemptions and new loan originations in the wake of FTX’s collapse. Islim told the participants on the call that Genesis is exploring solutions for the lending unit, including finding a source of fresh liquidity. He said Genesis intends to detail its plan to clients next week.
Genesis Trading, which acts as Genesis Global Capital’s broker/dealer, is independently capitalized and operated separately from that lending unit, Islim said. He added that Genesis’ trading and custody services remain fully operational. Genesis Global Capital, serves an institutional client base and had $2.8 billion in total active loans as of the end of the third quarter of 2022.
This decision impacts the lending business at Genesis and does not affect Genesis’s trading or custody businesses. Importantly, this decision has no impact on the business operations of DCG and our other wholly owned subsidiaries.
Last week, Genesis disclosed that its derivatives unit had about $175 million in locked funds in its FTX trading account. As a result, DCG opted to strengthen Genesis’ balance sheet with an equity infusion of $140 million. Genesis suffered major losses earlier this year due to the failure of hedge fund Three Arrows Capital (3AC).”
“Prominent crypto market maker B2C2 has offered to purchase loans from the suddenly-struggling crypto financial firm Genesis.
Throughout the current crypto market turmoil, B2C2 has provided critical liquidity and support to our global client base. The company is in a position to support the wider market by offering to work with Genesis and their counterparties to novate existing loans at Genesis Global Capital to B2C2. Loans will have to fall within our established risk management framework to qualify.”
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“Rep. Tom Emmer, a co-chair of the congressional blockchain caucus, was chosen for a leadership role in the next Congress and is bullish on digital assets in the wake of FTX. Emmer, elected as the incoming whip who will organize Republican members of the House for legislative votes, cautioned against making too much of the situation with FTX.
He said do-gooders shouldn’t be allowed to ‘rush in and put a huge wet blanket of regulation atop this industry just because something didn’t go right.’
We need to use the stage that is Congress to promote all of you beyond the walls of the Capitol. People need to understand more out there that they shouldn’t be afraid of this. You are here to stay. You are going to continue to grow. You do not get growth without taking risk.”
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“Decentralized-finance (DeFi) protocol MakerDAO said it can now handle “near-instant” transactions and faster withdrawals across the Ethereum blockchain and layer 2 networks for its $6 billion stablecoin, DAI. The new infrastructure called Maker Teleport enables users to send and withdraw DAI by circumventing the Ethereum blockchain’s base layer.
Maker Teleport reduces fees and settlement time for transferring DAI from between Ethereum and layer 2 networks. Maker Teleport is now available on Ethereum scaling networks Arbitrum and Osmosis.
MakerDAO is one of the biggest players in DeFi, and it also issues the largest decentralized stablecoin, DAI. Recently, it has invested a part of its $8 billion reserve into traditional assets such as U.S. Treasurys and corporate bonds, and decided to break up its organization structure into smaller units.”
“Ethereum development firm Matter Labs has raised a monster $200 million to support the launch of its zkSync V2 rollup network. Alongside its funding announcement, Matter Labs pledged to file its core software under an MIT Open Source license by the end of 2022, meaning third parties will be allowed to view, use and augment zkSync’s code.
The new funding brings the total amount raised by the firm to $458 million – a large sum, even in the wild world of crypto, that Matter hopes will put it on solid footing in the deeply competitive Ethereum scaling race. So far, Newcomb says that over 150 projects – including major decentralized finance platforms like Uniswap and Aave – have committed to launching on zkSync.
Other companies in addition to Matter Labs, like the research-oriented Scroll platform and the Ethereum juggernaut Polygon, are progressing on their own ZK-rollup platforms. Together, these firms represent the first cohort of a new class of so-called zkEVMS – ZK rollups which, unlike past applications of the technology, will be able to support virtually any program that runs on Ethereum.”
“The U.K.’s Law Commission is looking at how Decentralized Autonomous Organizations (DAOs) should be treated under the legal system.
The probe will look into issues like the relationship between DAOs and corporations; the status of investors and token holders; the legal liability of open-source code developers; and the ways in which DAOs tackle money laundering, file annual reports and pay taxes, the commission said.
DAOs are said to offer multiple benefits to market participants… yet their legal and regulatory status is unclear. Our work will aim to build consensus on the best ways of describing the constituent elements of DAOs and to highlight ways in which the law of England and Wales might foster their development.”
“Digital assets extended losses on Wednesday after the crypto financial firm Genesis Global Capital announced that it was temporarily suspending redemptions and new loan originations.
We don’t expect any sharp drops or selling pressure due to contagion fears alone since the bulk of the move is likely to be priced in already. At this point, any new development will result in temporary drops, but we don’t expect investors to be shocked by more FTX-related ramifications either. That being said, recovery from these lows may need time, both in terms of market capitalization and general sentiment.
Will Tamplin, a senior analyst at technical research firm Fairlead Strategies, said that if bitcoin can’t get back above its long-term support near $18,300 by Sunday’s weekly close, ‘a major breakdown would be confirmed in a bearish message from the market, which would increase risk to next support near $13,900.’
While FTX’s collapse and its ramifications for the broader crypto industry are a serious blow, it won’t scare away institutional investment from entering the market, according to Sheraz Ahmed, managing partner of Storm Partners. Once all the stakeholders directly and indirectly affected by the fall of FTX absorb the losses, ‘we could see institutions swoop in at the lows with their heavy pockets.’“
“FTX Digital Markets, the Bahamas arm of the now-defunct crypto exchange, has filed for Chapter 15 bankruptcy proceedings in the Southern District of New York. The procedure is intended to allow for an orderly wind-up of cross-border enterprises so that funds can be returned to creditors as fully as possible – potentially including the site’s many regular users.
The pleadings essentially argue that U.S. courts should recognize the Bahamas legal proceedings, allowing other legal claims by creditors to be paused. Under the U.S. bankruptcy code, other parties have three weeks to object before the court makes its decision.
As the U.S. business winds up, data from secondary markets suggest that creditors can expect to receive only 8-12 cents on the dollar for their claims on the collapsed company.”
“Former FTX CEO Sam Bankman-Fried continues to tweet and comment frequently about what led to FTX’s collapse, but his replacement as CEO is having none of it. John Ray’s statement on Twitter stressed that SBF no longer speaks on behalf of the exchange and affiliated companies.
Mr. Bankman-Fried has no ongoing role at @FTX_Official, FTX US, or Alameda Research Ltd. and does not speak on their behalf.
Legal experts say Bankman-Fried’s tweets are likely to be a liability in court cases that may result from FTX’s collapse.”
“The Federal Deposit Insurance Corporation (FDIC) decided to prioritize five key policies this year, which include evaluating the risks of crypto assets to the banking system. Gruenberg acknowledged the accelerated interest in crypto despite a bear market while confirming FDIC’s intent to better understand the crypto risks with the help of banks:
The FDIC will continue to work with our supervised banks to ensure that any crypto-asset-related activities that they engage in are permissible banking activities that can be conducted in a safe and sound manner and in compliance with existing laws and regulations.”