Monat: Januar 2023

• Singh was integral in the founding of FTX, faces charges
• Code was written to help Alameda take out unlimited line of credit  
• Singh and Gary Wang borrowed hundreds of millions

US authorities are ramping up pressure on Sam Bankman-Fried’s inner circle as they scrutinize Nishad Singh, a former close FTX associate according to insiders. Singh was integral in the founding of FTX. He has not been charged with anything, but he may be. Bloomberg’s Sonali Basak reports. 

Is Singh cooperating? 

Basak says:

We don’t know, but we do know he was in the “penthouse”, he lived with SBF. He was an insider who was really close friends with Sam’s brother. Gary Wang, who pled guilty, is cooperating. Part of the CFTC’s allegations are that code was written to help Alameda take out this unlimited line of credit that has essentially been found to be customer money. The aim is to see what role Nishad Singh played. 

Who else was in the penthouse?

Who else might prosecutors be looking at? One issue is the cooperators in the investigation. Damian Williams of the US District Attorney’s office said there are thousands of documents, signal messages, etc. Is it just the penthouse you’re looking at, or is it the broader FTX empire?

Basak brought up Ryan Salem, who was found in the court documents in the Bahamas to have tipped off Bahamian authorities. Then, there’s the entity FTX.US, which is said to be more shielded. There are things people knew…that this “penthouse suite” kept from them. 

Follow the money

When Singh’s name first came up, the new control of FTX had taken over. They put out that report and they talked about this idea that SBF had taken out about a billion dollars in loans through Alameda. They also said Singh and Wang had borrowed hundreds of millions. That’s the allegation. They have not responded, at least not publicly. 

Whose loans went where? 

Some of the information is coming from the bankruptcy filings. The prosecutors are not bankruptcy experts. The authorities are working on tracking “whose loans went where to buy what.” Ultimately, you’re going to have to seize those assets and get that money back. 

The domino effect 

In related news, crypto broker Genesis Global Trading eliminated 30% of its staff. Withdrawals have been halted by Genesis Lending for over a month. The question is: how much of this is contained to lending and how much is it a bigger problem for crypto conglomerate Digital Currency Group’s (DCG) head Barry Silbert, who is a big Wall Street voice? 

The Gemini-Genesis drama 

CNBC reported that Cameron Winklevoss, co-founder and president of Gemini crypto exchange, accused Silbert of engaging in “bad faith” tactics. He wants to resolve a thorny lending dispute with the company that emerged after FTX collapsed.

The dispute arose from an agreement between Gemini and Genesis Lending, a DCG subsidiary.  Gemini offered customers yields of up to 8% through its lending product Gemini Earn. To generate that yield, Gemini lent customer funds to Genesis Global Capital, which lent them out to institutional clients.

Gemini suspended redemptions for its Earn service a few days after FTX filed for bankruptcy. Genesis Global Capital also suspended its loan services. While Gemini denies any link to FTX, Genesis tweeted in November that they had around $175 million in funds locked inside FTX.

Conflict resolution deadline is tomorrow 

On January 2, Cameron Winklevoss wrote an open letter to Barry Silbert, alleging the latter had refused to meet with the Gemini team on numerous occasions. He set a deadline on January 8 when Gemini wants to see a proposal to resolve the conflict…or else. 

It was a fiery letter, the hosts on Bloomberg conceded. Basak concluded: 

When these things are hashed out on Wall Street, they are done behind investment bankers and lawyers. In crypto, they’re done on Twitter… 

 

 

The post Prosecutors ramp up pressure on SBF associate Nishad Singh appeared first on CoinJournal.

• Shares are down by more than 90% from their all-time high in November 2021 
• Silvergate is a “great example of everything that’s wrong with this industry”  
• They were working on a MMF, the most dangerous link in the crypto chain

Jim Cramer talked about why Silvergate is a ‘pivotal’ part of the crypto ecosystem on Mad Money, CNBC.

Silvergate’s shares plummeted, losing more than 43% yesterday, then another 2% or so. They are down by more than 90% from their all-time high in November 2021. According to the bank, the crypto industry’s breakdown caused a run on deposits, prompting it to fire 40% of its staff and sell assets at a major loss. Silvergate held deposits for FTX units and Alameda. 

Stocks can always go lower 

According to Cramer, stocks can always go lower and as long as they’re above zero, it’s fine. However, Silvergate is a pivotal part of the crypto ecosystem because it’s a “great example of everything that’s wrong with this industry.” Cramer said: 

The bank made a series of horrifying disclosures, which caused (the drastic fall). If we don’t address it, I worry that the market cap will shrink to the point where we won’t be allowed to talk about it on air. 

History of Silvergate Bank

Silvergate Bank was founded as a savings and loan association in 1988. It was transformed into a bank in 1996 by Dennis Frank and Derek J. Eisele. At first, it was quite small with just three branches in southern California. 

In 2013, CEO Alan Lane made a personal investment in Bitcoin, and the bank went into crypto. They launched services to companies in the crypto space, especially crypto exchanges. They got in very early according to Cramer, when most banks didn’t want to have anything to do with Bitcoin. Then, it was “really only Bitcoin.” 

Silvergate grew rapidly thereafter, reaching $1.9 billion in assets by 2017. The company was listed in November 2019 at a stock price of $13. The price had risen by 1580% in November 2021. 

Why did they fail?

As mentioned, the price is now down over 90% from then. Cramer explains:

Silvergate established the Silvergate Exchange Network (SEN), a payment network for the crypto space. You can send USD to other Silvergate customers instantly, 24/7, just like crypto transactions. The bank also offered loans with Bitcoin as collateral. They were working on their own stablecoin, like a pseudo money market fund (MMF) that allows you to go in and out of the market without friction, which is the most dangerous link in the crypto chain.

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