Gensler: Leverage and lack of disclosure hurting crypto

Gary Gensler, the Chair of the US Securities and Exchange Commission (SEC) says lack of disclosure and too much leverage are two factors hurting the crypto industry.

The SEC Chair’s comments on Thursday come at a time when the crypto sector is firmly in the spotlight again. This time, it’s the shock of what has happened with the FTX crypto exchange.

As CoinJournal reported earlier today, FTX is insolvent and this just added the inreased regulatory attention and overall rage around the crypto community.

Leverage and no disclosure is a ‘toxic mix’

As has been reported widely, FTX’s implosion is down to Alameda Research’s blowing billions in trading, and leaving FTX with an $8 billion hole. That money belonged to FTX customers.

When you mix together a bunch of customer money and borrowing against it, investors get hurt,” Gensler told Andrew Ross Sorkin on CNBC’s ‘Squawk Box’.

He added: “This is a very interconnected world in crypto with a few concentrated players. When markets turned on them it appears that a lot of customers lost money.”

Gensler has previously called on crypto exchanges and other providers to embrace regulation as well as offer more disclosures to better protect investors.

It’s a field that’s significantly non-compliant, but it’s got regulation,” the SEC Chair said, pointing out that crypto investors from all over the world are getting rekt. And other than leverage, consumers are falling prey to promotions from celebrities and there isn’t much disclosure.

This is not like the NYSE or Nasdaq. These platforms co-mingle. It’s a toxic combination where they take people’s money, they borrow against it. But not much disclosure, and then they trade against their customers,” ”he regulator explained.

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Voyager hasn’t transferred any assets to FTX: UCC

  • Voyager’s Committee of Unsecured Creditors (UCC) has said that Voyager has yet to transfer any assets to FTX.
  • The committee tweeted that the deal to have the bankrupt crypto lender sell its assets to Sam Bankman-Fried’s FTX has not been finalised.

Voyager, the bankrupt crypto lender that was in the process of selling its assets to FTX, is yet to transfer any assets to the beleaguered crypto exchange.

The Voyager token VGX,  which rose significantly when it first emerged FTX would be acquiring the crypto lender’s assets, was trading nearly 14% up Thursday afternoon (15.00 am ET). The FTX token was also up 8% at the time, with the gains coming amid a broader market upside.

Voyager’s yet to sell assets to FTX

According to a statement from Voyager’s Official Committee of Unsecured Creditors (UCC), the recent approval allowing FTX to buy Voyager assets after winning an earlier action has “not been consummated.”

We want to make clear that the FTX/Voyager transaction has not been consummated. Voyager has not transferred any crypto or other assets to FTX in connection with the transaction,” reads part of the statement the committee tweeted on Thursday.

As a result of developments involving FTX, the UCC says it’s going to take every step necessary in the quest to protect creditors. The team is currently evaluating all available options, they noted.

The UCC’s communication on Thursday comes in the wake of FTX’s halting of customer withdrawals in the midst of a liquidity crunch.

It also follows reports that Sam Bankman-Fried irresponsibly moved billions of dollars of customer funds to Alameda Research, the crypto exchange’s trading arm that is said to have blown everything.

Alameda reportedly owes FTX $10 billion while Bankman-Fried has noted that the exchange needs an emergency bailout of $8 billion.

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Crypto.com pauses withdrawals of USDC and USDT withdrawals on the Solana network

Crypto.com has notified its users that all deposits and withdrawals for Tether’s USDT and Circle’s USDC have been suspended on the Solana network.

Leading crypto exchange Crypto.com notified its customers via email a few hours ago that it had paused deposits and withdrawals for USDT and USDC stablecoins on the Solana network.

Crypto.com told its users that the pause is immediate. Hence, its users can no longer deposit and withdraw USDT and USDC stablecoins on the Solana network.

However, Crypto.com didn’t provide any explanation regarding why it is suspending those transfers. The move shouldn’t cause a problem for users as the USDC and USDT stablecoins exist on a wide range of other blockchains, including Ethereum, Polygon, BNBChain, and Tron. Crypto.com wrote;

“Following recent industry events, please be informed that we have suspended deposits and withdrawals of USDC and USDT on the Solana blockchain in the Crypto.com App and Exchange. This is effective immediately. However, you may withdraw USDC and USDT at any time using other supported networks, including Cronos and Ethereum. Please note that retrieval fees for depositing USDC and USDT on the Solana network in the Crypto.com App and Exchange will be waived for two weeks, starting from today.”

Crypto.com is adding to the market chaos caused by FTX’s ongoing struggles. Crypto exchange FTX had to pause withdrawals on its platform as it struggled to complete liquidity orders.

Binance initially agreed to acquire FTX and take on its numerous liabilities but revealed a few hours ago that it would no longer go through with the deal. According to Binance, FTX’s situation is beyond where Binance can help at the moment.

Crypto.com is one of the companies affected by FTX’s recent struggle. However, Crypto.com’s CEO Kris Marszalek said the firm’s direct exposure to the FTX meltdown is immaterial since it has less than $10 million of its own capital deposit on the FTX platform for customers’ trade execution.

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5 FTX alternatives you can invest with amid the current FTX crisis

The once cryptocurrency exchange giant FTX is facing an uncertain future following the current liquidity crunch and financial instability. The situation escalated after Binance backed out of a nonbinding agreement to buy out FTX.

According to sources familiar with the developments, Binance pulls out of its intent to take over FTX after going through its financial books.

The ongoing FTX crisis has pushed thousands of customers to withdraw their funds from the exchange in a bid to avoid having funds locked in the exchange in the event that it collapses completely. But where do you go after leaving FTX?

Best FTX alternatives

Here are the top 5 FTX alternatives that investors can invest with. In case you are looking for a particular crypto exchange that is not included in the list below, you can check out our full suite of broker reviews here.

1. Binance

Binance had a strategic investment in FTX in 2019. In the past few days, it has been embroidered in the FTX crisis and at some point offered to takeover FTX although it has since backed out of the deal. Binance itself operates the largest cryptocurrency exchange by trading volume making it one of the top choices for investors.

 2. Coinbase

Coinbase offers a cryptocurrency trading and investing platform enabling users to buy, sell, and exchange over 170 cryptocurrencies Including Bitcoin, Ethereum, and Dogecoin. It is the largest US-based crypto exchange and it also became the first publicly traded crypto exchange last year after direct listing on the Nasdaq exchange. It can be a good choice for active traders interested in trading and storing multiple cryptocurrencies.

 3. Gemini

Gemini is a regulated cryptocurrency exchange based in New York and available in all states in the US. With industry-leading security features, its own hot wallet, a beginner-friendly platform, robust educational resources, and a comprehensive support centre, Gemini can be a good choice for both beginners and experienced traders.

4. Kraken

Kraken is a United States–based cryptocurrency exchange and bank, founded in 2011. In September 2020, Kraken was granted a special purpose depository institution (SPDI) charter in Wyoming, becoming the first crypto exchange to hold such a charter in the United States. It was one of the first bitcoin exchanges to be listed on Bloomberg Terminal and was valued at $10.8 billion USD by mid-summer 2022. The exchange is quite established making it a good choice for investors.

 5. KuCoin

KuCoin is a secure cryptocurrency exchange that allows you to buy, sell, and trade Bitcoin, Ethereum, and 700+ altcoins. It is a Seychelles-based crypto exchange launched in 2017. Founded as “the people’s exchange,” KuCoin’s rich set of features and low fees make it a compelling choice for advanced crypto investors, particularly outside the US.

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BlockFi reopens Interest Yield Product for accredited US investors

Crypto lending platform BlockFi in a press release on November 7 stated that it will reopen the BlockFi Yield, an interest-bearing digital asset account, by the end of 2022 to US accredited investors.

The Beta version will be available to first select US investors starting at the end of the year. The product will afterwards be available to all US clients at the start of 2023 allowing investors to earn interest on digital assets.

The BlockFi Yield offers competitive interest rates on digital assets with no minimum investment requirement. To access the product, however, US investors will require to complete an investor accreditation process.

So far BlockFi has paid out more than $600 million in interest since it began offering BlockFi Yield.

BlockFi had initially suspended the product in the US

In February this year, BlockFi stopped offering BlockFi Yield to US clients after the US SEC accused the firm of failing to register the product. BlockFi was fined a total of $100 million by the SEC and state regulators which BlockFi agreed to pay. BlockFi has also agreed to stop opening new US accounts.

The charge against BlockcFi came right on the heels of the collapse of Voyager and Celsius, which necessitated scrutiny of the crypto space.

To remain operational in the extended crypto winter, BlockFi laid off about 20% of its workforce, reduced marketing expenses, reduced the salaries of executives, and also removed non-essential vendors. BlockFi also secured $250 million from the currently embattled FTX exchange, as reported in previous news here, in revolving credit.

In preparation for the reopening of the product to US customers, the founder and COO of BlockFi, Flori Marquez, said that the crypto lender is working on having the product registered with the SEC before offering it to the public.

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