Schlagwort: blockchain markets

According to court documents filed on Sunday at the US Bankruptcy Court for the District of Delaware ahead of the first hearing on Tuesday, John Ray who is the seasoned expert brought in to tidy up the wreck of the collapsed FTX is billing $1,300 per hour. The first hearing is aimed at shedding more light on the insolvency proceedings.

The documents further show that the restructuring experts are seeking to go ahead with paying the wages of the senior staff at the collapsed exchange despite a freeze on its funds and lack of a clear record of who is owed what by the exchange.

Continued payment of salaries

About 1 million creditors including crypto users may have their funds locked up in FTX after the exchange collapsed leading to a freeze on its funds.

But even then, Edgar Mosley, the managing director of the restructuring consultancy firm, Alvarez & Marsal hired to clean up the mess, has maintained that continued payment of salaries will help preserve resources and value of FTX’s estate.

Edgar Mosley in his filling said:

“Continued payment of salaries is necessary for the preservation of the resources and value of the FTX estate. Without it, I believe that even more employees may seek alternative employment opportunities … likely, diminishing stakeholder confidence in the Debtors’ ability to successfully reorganize.”

Edgar insisted that the payments made to CEO Ray and also the $975 hourly billing of Chief Administration Officer Kathryn Schultea, Chief Information Officer Raj Perubhatla, and Chief Financial Officer Mary Cilia are important in maintaining and administering what remains of the company as it tries to repay its debts.

According to the court filing, non-employee directors hired for proper governance during the insolvency process will earn a fee of $50,000 per month. They shall also be entitled to some other allowances.

Though the fees seem to catch the attention of the general public, the fees are a drop of water into the ocean in the pricey world of corporate restructuring. Ray’s total fees only account for a fraction of the total amount of money that the $3.1 billion that the FTX allegedly owes to its principal creditors.

Lastly, Mosley also recommended that FTX should go ahead and pay an extra $17.5 million to its critical contractors, especially those that will ensure the security of the crypto assets is maintained to avoid hacking and stealing of the assets.

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• FTX has engaged US-based firm Perella Weinberg Partners LP as its lead investment bank to help with the sale or reorganisation of subsidiaries.

FTX Trading is set to review all of the bankrupt cryptocurrency exchange’s assets around the globe, the team handling the collapsed company’s bankruptcy process said Saturday.

According to a press release FTX.com and about 101 affiliate companies, collectively the “FTX Debtors”, are rolling out a strategic review of all of the collapsed company’s global assets.

FTX review shows some subsidiaries are solvent

The exercise is part of the broader Chapter 11 process, the companies noted in the announcement, with the objective being to maximise asset recovery and to offer as much value as possible to FTX stakeholders.

These were the sentiments of John J. Ray III, the new Chief Executive Officer of FTX.

Ray is a prominent bankruptcy lawyer who took over from Sam Bankman-Fried as CEO last week. He noted in a statement published Saturday that the review will take note of the fact that some of FTX’s subsidiaries are solvent.

“Based on our review over the past week, we are pleased to learn that many regulated or licensed subsidiaries of FTX, within and outside of the United States, have solvent balance sheets, responsible management and valuable franchises,” Ray said.

As such, some affiliated companies like LedgerX, (which FTX acquired in 2021) and Embed Clearing, part of FTX’s acquisition spree in 2022, are not debtors. However, others like the Japanese crypto exchange Liquid and FTX Turkey are part of the bankruptcy cases as debtors.

FTX has engaged Perella Weinberg Partners LP as its lead investment bank as it looks to sell some businesses and reorganise others.  FTX’s engagement with the investment banking advisor is, however, pending approval by the Court.

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• Bybit’s largest asset wallet holdings total $1.9 billion, according to details from blockchain analytics firm Nansen.

Bybit has become the latest crypto exchange to publish information about its assets reserves, as calls for more transparency in the industry increase following FTX’s collapse.

On 16 November, Bybit announced it was revealing the user asset wallets, with portfolio data shared by blockchain analytics platform Nansen showing total assets were around $1.9 billion. 

According to the Nansen dashboard, Bybit’s largest reserve wallets are in Bitcoin, Tether (USDT), Ethereum (ETH), and USD Coin (USDC).

As well as releasing the wallet addresses of its largest users, Bybit founder and CEO Ben Zhou said the exchange was working on proof of reserves solutions.

“We are also exploring new custody solutions to allow users to view their own balance on chain or 3rd party custody. Bybit guarantees 1:1 reserves for all users and we made sure during this special period all users withdrawals are processed in a timely manner,” Zhou tweeted.

As CoinJournal highlighted a few days ago, Zhou believes the whole crypto industry has an obligation to “do right” by customers. 

Bybit’s announcement of their wallet reserves sees it join other exchanges in providing some measure of transparency at a time the industry is reeling from the FTX implosion. A spreadsheet compilation by crypto journalist Colin Wu shows Bybit has joined crypto exchanges such as Binance, OKX, KuCoin, Bitfinex and Huobi in this initiative.

Huobi and Bybit announced their cold wallet reserves. At present, among the major exchanges, only @gate_io @MEXC_Global @bitgetglobal have not announced their cold wallet addresses and 100% user reserves. https://t.co/6zrQbEe5wG https://t.co/eOJg9f3ssE pic.twitter.com/MmOs73HwGG

— Wu Blockchain (@WuBlockchain) November 16, 2022

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Sam Bankman-Fried and several other executives will be asked to testify at an upcoming House Financial Services Committee hearing on the collapse of the FTX cryptocurrency exchange. 

The exchange’s implosion has contributed to its native FTX token dumping by more than 90% in the past two weeks.

A CNBC report on Wednesday notes that House lawmakers want to see the FTX founder at Capitol Hill to give an account of what happened at the now bankrupt crypto exchange. 

Alameda and Binance execs to also testify

Apart from SBF, lawmakers are also looking to have executives from Alameda Research and Binance among others testifying, the report added.

The bipartisan hearing, being put together by HFSC’s Chairwoman Maxime Waters (D-CA) and ranking Republican Rep. Patrick McHenry (R- NC), will be held in December.

Waters said in a statement that FTX’s collapse had “posed tremendous harm”, with over one million people affected. Many of these users, the US lawmaker noted, are just everyday people whose hard-earned savings have disappeared.

According to her, the fall of the FTX cryptocurrency exchange is unfortunately just one of many crypto platforms to implode in 2022. As CoinJournal reported earlier today, there’s more to come out of this FTX crisis.

In May this year, cryptocurrency Terra (LUNA) and its algorithmic stablecoin TerraUSD (UST) collapsed. Millions of people lost money as over $60 billion in market value flushed down the drain within days, while contagion hit multiple crypto companies, including Three Arrows Capital.

The fall of the Singapore-based crypto hedge fund then impacted several other companies, notable among them crypto lenders Celsius and Voyager Digital that went bankrupt.

Last week, FTX filed for Chapter 11 – with about 130 affiliates included in the filing.

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The crypto lending arm of Genesis Global Trading, which prices itself as the premier institutional digital asset financial services firm, has temporarily suspended the redemption and issuance of new loans.

Genesis announced the developments through a tweet saying:

“We recognize how challenging this past week has been due to the impact of the FTX news. At Genesis we are entirely focused on doing everything we can to serve our clients and navigate this difficult market environment.”

The lending unit, which is known as Genesis Global Capital, had $2.8 billion in active loans according to its 2022 Q3 report.

Impact on Genesis Trading

Genesis Trading, which is Genesis Global Capital’s dealer/broker, is capitalized independently and operates separate from the lending unit.

In a follow up tweet, Genesis said:

“We would like to emphasize that Genesis Global Trading, our broker/dealer that holds our BitLicense, is independently capitalized and operated – and separate from all other Genesis entities.”

It further emphasized that:

“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.”

Taking steps to protect customers amid the FTX crisis

According to Genesis, the default of a loan issued to Three Arrows Capital negatively impacted the “liquidity and duration profiles’ on their lending entity and since then they have been “de-risking the book and shoring up our liquidity profile and the quality of our collateral.”

But there have been abnormal withdrawals exceeding the lending unit’s liquidity due to the market turmoil caused by the FTX crisis thus necessitating the temporary suspension of redemption and new loan origination in the lending business.

Genesis has also said that they are exploring best solutions for the lending business including sourcing new liquidity.

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