Autor Cointelegraph By Felix Ng

Genesis calls in restructuring expert in its fight to avoid bankruptcy

Genesis calls in restructuring expert in its fight to avoid bankruptcy

Uverejnil používateľ | nov 23, 2022 |

Cryptocurrency lending firm Genesis Global Capital has reportedly hired a restructuring adviser to explore all possible options that include, but aren’t limited to, a potential bankruptcy. It is understood that the firm has hired investment bank Moelis & Company to explore options, while people familiar with the situation have stressed that no financial decisions have been made and that it is still possible for the company to avoid a bankruptcy filing, according to a New York Times report on Nov. 22. Interestingly, Moelis & Company was also one of the firms engaged by Voyager Digital after it suspended withdrawals and deposits on Jul. 1 in order to explore “strategic alternatives.”Days later, Voyager Digital filed for Chapter 11 bankruptcy in the Southern District Court of New York as part of a reorganization plan that would eventually “return value to customers.” However, a Genesis spokesperson recently told Cointelegraph that it had no “imminent” plans to file for bankruptcy after a Nov. 21 report from Bloomberg suggested otherwise. “We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors,” said the spokesperson. It is understood that Genesis is seeking somewhere between $500 million to $1 billion from investors to cover a shortfall that ultimately stemmed from “unprecedented market turmoil” and the fall of crypto exchange FTX. According to a Nov. 22 Bloomberg report, the troubled lending firm has $2.8 billion in outstanding loans on its balance sheet, with around 30% of its lending made to “related parties” including its parent company Digital Currency Group along with its affiliate and lending unit, Genesis Global Trading. A recently circulating letter from Digital Currency Group CEO Barry Silbert states that it owes $575 million to Genesis Global Capital, which is due in May 2023. Related: Genesis denies ‘imminent’ plans to file for bankruptcySince FTX’s collapse on Nov. 11, all eyes have turned towards Genesis, Grayscale Investments, and their parent company Digital Currency Group, with concerns the firms could be the next victims of the contagion.All three companies have sought to quell investor fears over the last week.Grayscale Investments reassured investors in a Nov. 17 tweet noting that “the safety and security of the holdings underlying Grayscale digital asset products are unaffected,” referring to the withdrawal halt by Genesis Global Trading adding its products continue to operate as normal. In the wake of recent events, our investors should know that the safety and security of the holdings underlying Grayscale digital asset products are unaffected. — Grayscale (@Grayscale) November 16, 2022Genesis has reiterated that its spot and derivatives trading and custody businesses “remain fully operational” despite the suspension of client withdrawals in its lending business.Genesis’s spot and derivatives trading and custody businesses remain fully operational. We continue to support our clients who rely on us during volatile market conditions to manage their risk and execute on their business strategies.— Genesis (@GenesisTrading) November 16, 2022

Meanwhile, the latest letter to investors from Digital Currency Group CEO Barry Silbert reassured their investors that DCG is on track for $800 million in revenue in 2022.“We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger,” he said.

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FTX collapse won't impact everyday use of crypto in Brazil: Transfero CEO

FTX collapse won't impact everyday use of crypto in Brazil: Transfero CEO

Uverejnil používateľ | nov 20, 2022 |

The crumbling of the FTX crypto empire may have damaged Brazilian retail and institutional sentiment toward crypto. However, its impact won’t affect everyday citizens — who will still use crypto for cross-border transactions.Reflecting on the recent fall of FTX, Thiago César, the CEO of fiat on-ramp provider Transfero Group said that the exchange’s fall, like in many countries around the world, has hurt confidence around centralized crypto exchanges and crypto in general. Transfero Group is tied in closely with the Brazilian crypto ecosystem and FTX as it was the fiat on-and-off-ramp provider for the exchange and is also the issuer of Brazilian Stablecoin BRZ, which was listed on the now-defunct exchange. César told Cointelegraph that the collapse of the exchange had removed a “big liquidity source” from the market, as FTX was ranked within the top three in terms of trading volume. He also noted that uncertainty surrounding centralized crypto exchanges caused a “big outflow of funds” from exchanges in Brazil, with many looking into self-custody — estimating at least 20% of trading volume has been lost on exchanges so far. “A lot of people are trying to even liquidate whatever positions they have in crypto and we just hold money in the bank account.”César noted the FTX saga will make crypto investment a “harder sell” for new investors and traders.“For the crypto investor/trader of course. It’s a harder sell now. If you go to a person who is not crypto savvy and you try to convince him to invest, especially in Brazil — the population has always been very skeptical of crypto. Now it’s harder,” he said. However, he notes that for people that use crypto as a means for cross-border payments or the “internationalization of money,” there will unlikely be any impact from the FTX collapse. “A lot of the crypto volume in Brazil derives from players that are willing to exchange their local currency into an internationally liquid asset denominated in dollars. So in that sense, the market will not die down because crypto is just rails for that.” In October, a report from Chainalysis found that remittance payments and battling inflation were two of the most significant drivers of crypto adoption in Latin America.Related: Brazilian SEC seeks to change its role in cryptocurrency regulationCésar said the FTX collapse will likely be used by local exchanges “as a lobbying tool” to push for regulations aimed at bringing international exchanges in line. César added that these crypto exchanges had been pushing for regulation in Brazil that would “segregate” local and international exchanges by taking away international exchange’s access to their global liquidity books. “They were proposing that regulation would enforce for example, that liquidity on the books in Brazilian reais be segregated from international books.”César explained that such regulation would hurt international exchanges as their main advantage comes from liquid, international global books. In a Nov. 18 report from Reuters, Roberto Dagnoni, the executive chairman and CEO of Mercado Bitcoin said crypto laws in Brazil have been “kind of dormant” during the election period but now needed priority.“The rules that currently exist have not been applicable to some players, so they can do whatever you want,” he said.

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Ripple to consider deals for FTX assets: Brad Garlinghouse

Ripple to consider deals for FTX assets: Brad Garlinghouse

Uverejnil používateľ | nov 20, 2022 |

Ripple CEO Brad Garlinghouse is reportedly interested in buying certain parts of collapsed crypto exchange FTX.On the sidelines of Ripple’s Swell conference in London — was held on Nov. 16 and 17 — Garlinghouse told The Sunday Times that former FTX CEO Sam Bankman-Fried called him two days before the company filed for bankruptcy as he sought to round up investors to rescue the business.Our 6th annual #RippleSwell is underway! I took the stage this morning with @cnbcKaren to discuss all things Ripple, crypto utility, macroeconomic factors affecting crypto, and much more. A thread… pic.twitter.com/EDHW3nyka8— Brad Garlinghouse (@bgarlinghouse) November 16, 2022The Ripple CEO said that during the call, the two discussed if there were FTX-owned businesses that Ripple “would want to own.” “Part of my conversation was if he needs liquidity, maybe there’s businesses that he has bought or he has that we would want to own […] Would we have bought some of those from him? I definitely think that was on the table,” he said. However, Garlinghouse admits that now that FTX has filed for Chapter 11 bankruptcy in the United States, a potential transaction for an FTX business will be “very different than it would have been one-to-one.”“I’m not saying we won’t look at those things – I’m sure we will. But it’s a harder path to transact,” he added. Approximately 130 companies affiliated with FTX, including FTX.US, were included in the bankruptcy filing in Delaware. Some subsidiaries not included in the proceedings include crypto clearinghouse LedgerX, FTX Digital Markets, FTX Australia Pty, and payments processor FTX Express Pay. Garlinghouse said he would be interested in buying the parts that served business customers. Cointelegraph has reached out to Ripple for additional comment but has not received a response by the time of publication. Related: Sam Bankman-Fried updates investors: ‘We got overconfident and careless,’ claims $13B leverageIt appears that Ripple’s executives, like many in the industry, are following the latest developments of the FTX saga. On Nov. 10, Ripple chief technology officer David Schwartz directed a message on Twitter toward employees of FTX, suggesting that there would be room at Ripple for them, so long as they aren’t involved in compliance, finance or business ethics.” Hey @FTX_Official employees not involved in compliance, finance, or business ethics:@Ripple is always hiring.— David “JoelKatz” Schwartz (@JoelKatz) November 10, 2022

FTX has recently appointed restructuring administration firm Kroll as its agent to track all claims against FTX and ensure interested parties are notified of developments throughout its Chapter 11 bankruptcy case.

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FTX will be the last giant to fall this cycle: Hedge fund co-founder

FTX will be the last giant to fall this cycle: Hedge fund co-founder

Uverejnil používateľ | nov 18, 2022 |

While the FTX crisis is continuing to unfold, the former head of risk at Credit Suisse believes the exchange’s fall from grace should be the last catastrophic event — at least in this market cycle. CK Zheng, the former head of valuation risk at Credit Suisse and now co-founder of crypto hedge fund ZX Squared Capital said that FTX’s fall was part of a “deleveraging process” that began after the COVID-19 pandemic and further accelerated after the fall of Terra Luna Classic (LUNC), formerly Terra (LUNA).“When LUNA blew up a few months ago, I expected a huge amount of deleveraging process to kick in,” said Zheng, who then speculated that FTX should be last of the “bigger” players to get “cleaned up” during this cycle. Before its collapse, FTX was the third largest crypto exchange by volume after Binance and Coinbase. “I’m sure there are multiple players that will probably get impacted […] in the following weeks, you know, small, large — but I would say this one in terms of magnitude will be one of the larger ones before the whole cycle really ends.”On Nov. 14, crypto exchange BlockFi admitted to having “significant exposure” to FTX and its affiliated companies. A day later, a Wall Street Journal report suggested it was preparing for a potential bankruptcy filing. A number of exchanges have also halted withdrawals and deposits this week, citing exposure to FTX, including crypto lending platform SALT and Japanese crypto exchange Liquid. On Nov. 16, institutional crypto lender Genesis Global said it would temporarily suspend withdrawals citing ‘unprecedented market turmoil.’The fate of these businesses are yet to be determined.Zheng noted that moments like this are all normal signs of a lengthy, stressful crypto winter which “basically wipes out many of the weak players.” On a positive note, however, Zheng said that the FTX collapse is unlikely to shake institutional investor confidence, at least for those investing in blockchain technology and certain cryptocurrencies such as Bitcoin and Ethereum.“For many of the institutional investors […] as long as they think about the longer term, they think about how blockchain technology is going to advance in the future to help the financial industry […] that’s still in place.”CoinShares’ head of research James Butterfilll in a Nov. 14 note revealed that inflows into cryptocurrency investment products rose sharply last week after institutional investors bought the dip triggered by FTX’s collapse. Investors see the #FTX collapse as an opportunity with crypto inflows totalling US$42mhttps://t.co/neDkmnr6ae— James Butterfill (@jbutterfill) November 14, 2022Digital asset investment products saw inflows totaling $42 million in the week ending Nov. 13, the largest increase in 14 weeks.On the other hand, their outlook wasn’t so optimistic for blockchain equities, which registered $32 million in weekly outflows. Related: Paradigm co-founder feels ‘deep regret’ investing in SBF and FTXZheng said it was “mind-boggling” how much damage an MIT-educated, 30-year-old young person can do to the crypto ecosystem — referring to FTX former CEO Sam Bankman-Fried. He believes the fall of FTX was the result of a lack of clear rules and regulations governing crypto exchanges. Zheng said it may also have been the result of a top-heavy management structure that may not have had the necessary know-how to run a business of such a size. “Obviously, they’re smart in one aspect, but they’re running a $32 billion company is very different than, you know, when you manage a small company.”

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Paradigm co-founder feels 'deep regret' investing in SBF and FTX

Paradigm co-founder feels 'deep regret' investing in SBF and FTX

Uverejnil používateľ | nov 16, 2022 |

The co-founder of asset management firm Paradigm says they feel “deep regret” for having invested in FTX amid recent revelations involving FTX, Alameda Research, and Sam Bankman-Fried. In a Twitter post on Nov. 15, Matt Huang, co-founder and managing partner of Paradigm said the firm is “shocked” by the revelations surrounding the two companies and their founder, adding: “We feel deep regret for having invested in a founder and company who ultimately did not align with crypto’s values and who have done enormous damage to the ecosystem.”Matt Huang, Managing Partner and Co-Founder of Paradigm Source: ParadigmParadigm is a crypto and Web3-focused venture capital firm based in San Francisco. In April reports suggested the firm’s assets under management totaled approximately $13.2 billion. In Nov. 2021, the firm announced a $2.5 billion New Venture Fund, which dethroned Andreesen Horowitz’s (a16z) as the largest venture fund in crypto. The firm’s website currently lists FTX and FTX.US in its portfolio. Reports suggest its investment in the exchange is around the $278 million mark. Huang said that Paradigm’s equity investment in FTX only constituted “a small part of our total assets,” adding that it has now written its FTX investment down to $0. Facts are still coming to light, and there will be many lessons to learn. We feel deep regret for having invested in a founder and company who ultimately did not align with crypto’s values and who have done enormous damage to the ecosystem.— Matt Huang (@matthuang) November 15, 2022He also assured that the firm has never traded on FTX or has ever invested in tokens linked to the exchange, including FTX Token (FTT), Serum token (SRM), Maps.ME Token (MAPS), or the Oxygen Protocol token (OXY).“We never traded on FTX and did not have any assets on the exchange. We have never been investors in related tokens such as FTT, SRM, MAPS, or OXY.”Related: FTX bankruptcy freezes millions worth of crypto company fundsSince posting the tweet, a number of Twitter users challenged whether the firm did enough due diligence prior to investing in FTX. you guys made a bad bet. you didn’t do your due diligence. and your endorsement led others to believe in & support the fraud that was SBF/FTXthat was very bad, and i hope you’ll strive to do betterbut i respect taking the L and publicly owning up to it. that is the right move— DCinvestor.eth ⌐◨-◨ (@iamDCinvestor) November 15, 2022

Speaking to Cointelegraph, CK Zheng, co-founder of digital assets hedge fund ZX Squared Capital reflected that in hindsight, many venture capital firms may not have done the proper due diligence on FTX and its executive team, commenting:“They don’t have a very good governance process, don’t have a board. It’s basically a one-man show.”“I’m sure when a young company starts to build the company with sophisticated technology […] I can see how things can go bad quickly if they don’t have a good understanding of the technology married with finance.” “Obviously, they’re smart in one aspect, but they’re running a $32 billion company is very different than, you know, when you manage a small company,” he added.Investors to have recently marked down their FTX investments include Sequoia Capital, which wrote off its roughly $210 million investment on Nov. 10, Ontario Teachers’ Pension Plan, which invested $95 million in the crypto exchange, and SoftBank Group Corp., which is expected to write down a nearly $100 million investment.

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