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bitcoinadmin November 22, 2022 No comments News permalink

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News Overview 11/22: FTX, Northcrypto, Coinmotion, Genesis, Cardano, El Salvador

New information is emerging all the time about the FTX bankruptcy.  The Finnish exchange Northcrypto is buzzing amid the turmoil in the market. Coinmotion suspends offering interest accounts to its customers. Prime broker Genesis is on the verge of bankruptcy. Cardano gets new stablecoins! El Salvador plans to buy one bitcoin every day.

FTX’s bankruptcy estate is second to none

Let’s start with the most popular topic in recent weeks. It’s been almost two weeks since the FTX exchange crashed, but the topic remains hot. The main drama has faded, though, since the exchange formally filed for bankruptcy.

Very little information from inside has been made public. Sam Bankman-Fried is apparently still under the supervision of the Bahamian authorities. The status of other key FTX executives is unclear. There have also been no dramatic revelations about the reasons or motives for the collapse.

The most controversial issue has been the mainstream media’s bizarre response to the event. Popular online columnist Coffeezilla sums it up well in the tweet below.

SBF has been the subject of several articles in US newspapers, which have portrayed him more as a failed visionary than a financial criminal. This has naturally raised the blood pressure of many investors.

Last week, a little more information has become available through the official bankruptcy filing of FTX. The bankruptcy estate is currently being overseen by John J. Ray, who has become famous as the liquidator of Enron, among other things. Ray’s comment about FTX is quite arresting.

FTX may well be a worse hotbed of financial crime than Bernie Madoff’s famous Ponzi scam and the Enron collapse of the early 2000s. Or how about the following excerpts from the FTX bankruptcy filing:

  • FTX lent SBF $1 billion for personal use
  • FTX used its clients’ money to buy real estate in the Bahamas
  • FTX did not have an up-to-date list of the company’s employees
  • FTX did not keep records of digital assets

All the above points sound quite incomprehensible when you consider that the FTX had a valuation of over 30 billion dollars. Has no one audited this mess?

Many readers will probably remember the FTX hacking drama on Friday 11 November. This was after the exchange had announced it was going bankrupt. An as-yet-unknown hacker stole over $400 million worth of cryptocurrency from the remaining assets.

The FTX hacker has become more active in recent days. This entity has been chopping up $200 million worth of Ether to several addresses and converting the coins into renBTC, a synthetic version of Bitcoin. The hacker’s aim is to swap renBTC -> BTC and then clear his tracks through mixing services.

We will continue to report on FTX developments in the coming weeks.

Trading continues normally on Northcrypto

In last week’s news overview, we mentioned how the chaos caused by FTX has also been a boost for some players in the industry. For example, wallet mobile apps are now being installed in huge numbers. There is also more demand than ever for Ledger Nano X cold wallets.

Finnish exchanges are also among the winners in this chaos. More and more investors value the security and reliability of the Finnish regulation in a whole new way.

Heidi Hurskainen, CEO of Coinmotion, and Ville Runola, CEO of Northcrypto, commented on the FTX scandal last week in Kauppalehti. Unfortunately, the article is for subscribers only. Runola was also interviewed by Yle local news.

Ville Runola says Northcrypto has seen a lot of trading in recent weeks. He says this is typical during times of high volatility.

Northcrypto has also seen heavy traffic in cryptocurrencies. Many people have moved their coins from foreign exchanges to Northrypto. This is a good solution if you don’t yet have the courage to install your own wallet.

According to Runola, Northcrypto has also been contacted by its customers since the FTX collapse. Many want to make sure that Northcrypto does not allow customers’ funds to be used for risky investments, as has been shown in the FTX case.

Finnish operators are closely regulated by the Finnish Financial Supervisory Authority. This regulation demands that services separate the company assets from those of their customers.

We also interviewed CEO Ville Runola last week! Read Ville’s comments on the FTX collapse, the market situation, and Northcrypto’s future steps in this article.

Coinmotion suspends the offering of interest accounts

Let’s continue with news from the Finnish market. We were just about to publish a news review when Coinmotion announced new information about their interest rate service. According to the latest information, Coinmotion will suspend the offering of interest-earning accounts to its customers.

A link to the official press release can be found below.

The Coinmotion interest account has been implemented in cooperation with Tesseract Group. According to the press release, Coinmotion wants to safeguard the interests of its customers in a situation where several loan providers have run into difficulties. A good example of this is the potential bankruptcy of Genesis, more on which below.

According to Coinmotion, its customers can use the interest account if they wish. Withdrawal of funds is also possible in accordance with the terms and conditions of use. There is no information at this stage on the suspension of withdrawals or any other problems. This, therefore, appears to be a precautionary measure.

It is also good to understand that the news only concerns the interest account. Other funds stored in Coinmotion are always 100% under Coinmotion’s control. If you do not use this yield service, the news does not apply to you in any way.

Prime broker Genesis is on the verge of bankruptcy

The collapse of FTX has already claimed several victims. FTX customers, employees, and investors have all lost money. Investors are currently looking towards Digital Currency Group and its subsidiary Genesis. There are some really big dominoes on the way down.

Genesis may not be familiar to the average crypto investor, but it is the only prime broker in the industry. In short, Genesis is the company that handles the largest & most important institutions in the crypto world. It provides an OTC desk, custody services, etc. This Twitter thread provides lots of information.

Genesis is also the financier of interest accounts for several crypto exchanges. Last week it emerged that Gemini, an exchange set up by the Winklevoss twins, is one of Genesis’ clients. Customers of the Gemini Earn service are now at risk of losing their money.

Genesis’ problems go back six months to the collapse of the 3AC hedge fund. Genesis lost over $1 billion at the time, but the parent company Digital Currency Group stepped in.

DCG is one of the giants of the entire crypto industry. Its portfolio includes the names of almost every major company in the industry. In addition to Genesis, DCG’s subsidiaries also include Grayscale, which runs the Bitcoin fund favored by institutions. It holds nearly 650,000 bitcoins, making Grayscale the largest single Bitcoin holder in the market.

It seems that the collapse of FTX and Alameda was the final nail in the coffin of Genesis. The company needs up to half a billion dollars in emergency funding, which parent company DCG is apparently unable to provide. Genesis is otherwise headed for bankruptcy, according to the Wall Street Journal.

The bankruptcy of Genesis could bring down yet more dominos and, in the worst case, the parent company Digital Currency Group and/or some of its subsidiaries. Is Grayscale’s Bitcoin Fund also at risk? One of the potential saviors would have been Binance. Last night, however, news broke that the company will not participate in the rescue of Genesis.

Cardano gets new stablecoins

New players are entering the stablecoin market. This was reported late last week by Emurgo, the company responsible for the commercialization of the Cardano ecosystem. Another major player in Cardano is Charles Hoskinson’s technology company IOHK.

The new stablecoin is called USDA and is the first fully regulated stablecoin in the Cardano ecosystem backed by the US dollar. According to Emurgo, its launch will take place during Q1-2023.

In addition, another stablecoin will be launched on the Cardano platform. It’s called DJED, an algorithmic stablecoin that has got many investors worried. The collapse of the Terra UST stablecoin is still fresh in the memory. In the Twitter thread below you can find facts about DJED.

Algorithmic stablecoins have so far caused headaches for investors. But not every one of them. For example, USDD, launched by Tron, is still going strong, despite the fact it has lost the peg to the dollar a couple of times.

DJED aims to prevent the fate of the UST, the “death spiral”, by providing sufficient collateral. Each DJED stablecoin is backed by $3 to $7 worth of ADA tokens in the reserve pool.

Stablecoins are a vital part of the DeFi ecosystem on every platform. USDA and DJED will certainly provide a boost to Cardano’s DeFi sector and may also raise the ADA token price (once the general bear market has ended).

El Salvador started daily Bitcoin purchases

The Bitcoin revolution in El Salvador has disappeared from the headlines in 2022. The country’s Bitcoin reserves have also collapsed in dollar terms. El Salvador has acquired 2,381 bitcoins at an average price of around $45,000. The pot, which cost just over 107 million, is now worth 37.5 million.

However, President Nayib Bukele is not giving up. He also tweeted a week ago his own views on the FTX craze, stating, “FTX is the opposite of Bitcoin.” A few days ago, Bukele announced the country’s new plan. El Salvador will buy one Bitcoin every day.

It is more a symbolic gesture than an investment. In any case, El Salvador is the only country that is actively investing in Bitcoin. The Bitcoin holdings of other countries are mainly confiscated from criminals. Ukraine also holds bitcoins because of donations to the war.

Not everyone, however, subscribes to the popularity Bukele has gained among Bitcoin maximalists. Ethereum founder Vitalik Buterin criticized Nayib Bukele again in a recent interview. According to Buterin, Bitcoin fans are not interested in the undemocratic behavior of Bukele’s government.

A lot of Bitcoin people ignored the fact that Bukele’s government is not a very democratic government that actually has a lot of problems, and they are not that good at respecting other people’s freedoms.

Buterin claims that the way El Salvador is pushing Bitcoin to its citizens has been wrong. The timing of the bull market also led many to speculate on a price rise. “Now it looks just terrible and not many people are using it.”, Buterin states.