Kategorie: Crypto Markets

• The judge in charge of overseeing the FTX bankruptcy proceedings has given FTX approval to sell some assets.
• The assets under consideration include LedgerX among other assets.
• The move will allow FTX to get money to repay its creditors.

After filing for permission to be allowed to sell some of its functioning businesses in December 2022, FTX can now breathe a sigh of relief after the judge in charge of overseeing the FTX bankruptcy proceedings approved the sale of its assets to aid its efforts in repaying its creditors.

The businesses that FTX has been allowed to sell include the derivatives platform LedgerX, it regional arms FTX Europe and FTX Japan, and the stock clearing platform Embed.

All systems go for auction

After the Delaware Bankruptcy Court Judge, John Dorsey gave the go-ahead for the sale of the four key FTX units, interested bidders can now Perella Bank which is tasked with overseeing the sale process. The investment bank will be representing FTX and its assets in the process.

Earlier this week, about 117 parties had expressed interest in buying the said FTX assets. These parties will now be allowed to access information regarding the assets so as to perform their due diligence before making up their minds on whether to go ahead with the purchase.

FTX Europe has its license suspended while FTX Japan is subject to business suspension orders.

The sale approval is a reprieve for the embattled crypto exchange which has so far recovered about $5 billion in assets since its collapse. The funds obtained from the sale will go a long way in raising funds for repaying the exchange’s creditors.

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• Investigations show that Hodlnaut lost about $190 million in the Terra LUNA crash.
• The lender had proposed a restructuring plan to allow creditors to have a view of the company’s operations.
• The creditors however want liquidation of the company’s assets.

Troubled Singapore-based crypto lender Hodlnaut seems to be heading for a possible liquidation after its creditors rejected a proposed restructuring plan and instead sought liquidation of the lender’s assets.

Hodlnaut started by downplaying its exposure to the Terra LUNA collapse but after the platform suspended withdrawals citing lack of liquidity and market volatility, investigations were carried out and it immerged that it lost about $190 million in the Terra debacle and the executive later deleted numerous documents related to their investments in order to avoid exposure.

Hodlnaut later sought judicial management to avoid liquidation and it was eventually placed under a creditor protection program with hopes that it would restore its asset-to-debt ratio to 1:1 and allow users to withdraw funds.

The government-aided judicial program seems not to have helped. In November investors lodged complaints resulting in the investigation of the founders for “underplaying their exposure to certain crypto tokens and misrepresentations of facts.”

Hodlnaut restructuring plan

The proposed restructuring plan allowed the current directors to oversee the operations of the lending company during the restructuring process meaning the interim judicial managers were to be sidelined. However, in a hearing on January 12, the application to remove the interim judicial managers was rejected.

The firm’s creditors rejected the restructuring plan rather and asked for liquidation of the platform’s assets. They believe that the restructuring would not help remove the crypto lender from its current woes and that it was in their best interest that the firm wind down and liquidates its assets.

Algorand, for example, which is one of Hodalnut’s creditors, called for immediate liquidation and distribution of the remaining assets among the creditors.

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• The US SEC is accusing Gemini and Genesis of selling unregistered securities.
• Genesis and Gemini did not register their partnership as a lending partnership.
• Genesis has been having liquidity issues after FTX’s collapse and has paused withdrawals to date.

The US Securities and Exchange Commission (SEC) has filed charges against Genesis and Gemini accusing the two of selling unregistered securities through the Gemini Earn product.

According to the SEC, the Gemini Earn allowed Gemini and Genesis to earn billions of dollars from investors despite the product being unregistered.

Unregistered lending partnership

Gemini introduced the Gemini Earn product in February 2021 and the product ran until January 8 2022.  At the same time, Gemini had a partnership with Genesis, which is a subsidiary of Digital Currency Group (DCG). The partnership allowed Gemini customers to earn yield by lending their crypto assets to Genesis.

The SEC however claims that the two firms (Genesis and Gemini) misrepresented their business model by advertising returns of up to 8% to clients without first registering the partnership as a lending partnership with the relevant authorities.

Genesis withdrawals

To make matters worse, Genesis found itself in turmoil after the FTX’s collapse and even paused withdrawals due to liquidity issues. According to open letters written by Cameron Winklevoss, the co-founder of Gemini Earn, Genesis currently owes $900 million to 340,000 users of the Earn product.

The SEC also claims that the “US retail investors who participated in the Gemini Earn program have suffered significant harm.” The SEC Chair Gary Gensler said:

“Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws.”

Gemini co-founder has however said that Gemini will defend itself saying that SEC claims are “parking ticket.”

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• Crypro.com CEO cited poor market conditions and recent events in the industry as reasons for layoffs.
• The layoffs come just days after Coinbase announced similar layoffs.
• The Cronos (CRO) token price has responded positively to the news.

The co-founder and CEO of Crypto.com exchange, Kris Marszalek, has today announced that the company is laying off some of its staff to reduce its global workforce. The CEO said that they are reducing the workforce by 20%.

In the announcement, the CEO said:

“Today we made the difficult decision to reduce our global workforce by approximately 20%.”  

In a follow-up tweet post addressing the matter, Marszalek wrote:

“We grew ambitiously at the start of 2022, building on our incredible momentum and aligning with the trajectory of the broader industry. That trajectory changed rapidly with a confluence of negative economic developments.”

Crypto firms laying off workers in mass

According to sources, Crypto.com has about 3500 to 4500 employees, meaning the 20% layoffs would affect about 700 to 900 employees.

Crypto.com is not the only crypto firm to announce layoffs this year. Huobi announced layoffs at the start of the year while Coinbase also announced layoffs a few days ago.

The laying off of workers sends mixed signals since the crypto market is currently on a recovery trajectory and investors are expecting some good performance this year compared to last year. Crypto.com has also grown to over 70 million users worldwide, something that is seen as a positive development for the company.

Cronos (CRO) token price surge

The Cronons (CRO) token price has responded positively to the news and risen by about 3.08% in the last 24 hours.

The CRO coin has been on a positive trajectory since the start of the year having gained about 15.3% over the past 14 days.

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• The cryptocurrency market capitalization has risen by about 3.18% in the past 24 hours.
• Ether has hit a two-month high trading at about $1400.
• The crypto market in general has risen against the cautious tone in the US stock market.

Crypto traders who had bet on a market decline have been caught off-guard by the broad recovery in the crypto market. As a result, about $200 million worth of short trades against price rises has been liquidated in the past 24 hours.

Another more than $150 million worth of short trades were also liquidated earlier this week as Ethereum (ETH) and bitcoin (BTC) broke past key resistance levels according to data from CoinGlass. Other major altcoins like XRP and Solana also registered gains of about 20%.

Ether-tracked futures also saw liquidations worth about $110 million in both long and short positions. Bitcoin saw liquidations worth about $77 million, while AVAX and GALA saw $4.5 million in liquidations.

Ethereum’s strong performance

Despite the cautious tone around the US stock futures, Ethereum (ETH) has rallied to a two-month high, confirming that the crypto is well prepared for a recovery in 2023 if the bullish trend is sustained.

Ethereum’s bullish trend is further projected to gain momentum ahead of the scheduled March Shanghai upgrade, which is designed to de-risk staking by allowing people to withdraw ETH staked into the Beacon Chain. There was some Ether that ware locked/staked into the Beacon Chain in December 2020.

The Shanghai upgrade is expected to boost staking demand causing a decrease in the circulation supply of ether, which the law of demand and supply dictates would result in a rise in ETH prices.

According to Thielen, the upgrade:

“Will motivate many ETH holders to stake their ETH as only 14% of the ETH is being staked now, compared to 58% for other Layer 1 protocols. Hence, another $20 billion of ETH can be easily staked. More ETH staked means less ETH available to sell when negative news hits the market. Hence, this is bullish.”

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