The debtors of FTX are making “Herculean” efforts to locate the exchange’s remaining assets. Meanwhile, Sam Bankman-Fried believes that FTX US is financially sound.
Large corporations spend a lot of money to maintain track of their financial transactions – think accountants, financial analysts, consultants, and enterprise-grade accounting software. Meanwhile, Sam Bankman-Fried worked with Microsoft Excel.
On January 17, SBF revealed that FTX US was solvent in another shoddy Excel spreadsheet. The Excel file allegedly contained client balances, bank deposits, and assets in cold storage. SBF stated that “S&C omitted to include bank balances” of around $428 million, alluding to FTX’s previous legal counsel Sullivan & Cromwell. “When you add those back in, you get close to my previous balance sheet” of roughly $350 million, he said.
This week’s Crypto Biz delves into the “Herculean investigative endeavour” to locate billions of dollars in liquid FTX assets. We also update you on the current Digital Currency Group drama.
SBF wasn’t the only one looking for FTX’s remaining funds. Debtors of the bankrupt exchange have identified $5.5 billion in liquid assets, including $1.7 billion in cash, $3.5 billion in cryptocurrency assets, and around $300 million in securities. “We are making significant progress in our attempts to optimise recovery, and it has taken our team a Herculean investigation effort to find this preliminary information,” FTX CEO John Ray stated. Before you get too enthusiastic, keep in mind that there is still a “significant deficit of digital assets,” according to FTX’s debtors. This indicates that FTX users should not expect to be compensated very soon.
The industry is still reeling from the effects of crypto winter, with digital asset bank Silvergate posting a staggering $1 billion net loss in the fourth quarter. Silvergate recorded $7.3 billion in customer deposits in Q4 in a report filed with the US Securities and Exchange Commission, down from around $12 billion in the third quarter. Following the announcement, credit rating agency Moody’s Investors Service reduced Silvergate’s rating from Baa2 to Ba1. If you’re keeping track, that’s garbage status. It’s becoming clear why Silvergate fired off 40% of its employees in early January.
The bad news surrounding Digital Currency Group, or DCG, keeps piling up after the capital market company warned investors that quarterly dividend payments will be suspended indefinitely. It’s no secret that DCG is experiencing liquidity issues as a result of its Genesis Global Trading business. Gemini co-founder Cameron Winklevoss brought the Genesis difficulties to light in a letter to DCG’s board, accusing the corporation of conducting “a meticulously orchestrated campaign of deception” to conceal the enormous hole in Genesis’ balance sheet. At the time of the latest check, DCG owed its debtors more than $3 billion.
Months of “down only” in crypto markets have made many of us pessimistic about the industry’s future. However, venture capitalists continue to pump millions of dollars into promising crypto-focused use cases. HashKey Capital, a Hong Kong investment firm, unveiled a $500 million fund this week to assist the future of Web3 adoption. The new FinTech Investment Fund III will largely invest in startups that combine blockchain infrastructure, tooling, and apps that can leverage Web3 technology. “Web3 is expanding too quickly to ignore,” HashKey investment director Xiao Xiao told Cointelegraph. “Many traditional institutions and internet behemoths are interested in cryptocurrency. Some people are learning how to take part in this paradigm change.”
Bitcoin’s price has risen by more than 25% in the last week, marking the largest seven-day gain in nearly two years. Naturally, investors are wondering if the bear market has ended. Although Bitcoin may have bottomed, I wouldn’t get too enthused about a protracted bull bounce just yet. In this week’s Market Report, I talked with fellow analysts Marcel Pechman and Joe Hall on Bitcoin’s immediate and medium-term prospects. The full replay is available below.