crypto news review

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News Review 12/6: FTX, Genesis, Chainlink, Coinbase, Nexo

FTX founder Sam Bankman-Fried has given several interviews in recent weeks but has yet to admit to any wrongdoing. Genesis owes $900 million to the Winklevoss brothers’ Gemini exchange. Chainlink’s stake starts after years of waiting. Apple threatens Coinbase Wallet and possibly other crypto wallets soon. Loan service Nexo withdraws from the United States.

Sam Bankman-Fried has given several interviews

Almost a month has passed since the collapse of the crypto exchange FTX. If you are not yet aware of what happened, read our comprehensive report on the details and background of the collapse.

The biggest uproar around FTX has subsided, and no significant revelations have emerged from the case. At the moment, we are especially waiting for additional information about contagion. Which companies will be in trouble due to the collapse of FTX? One of these is definitely Genesis, which will be discussed later in this article.

The theme of the last few weeks has been the numerous appearances of Sam Bankman-Fried, the founder of the FTX exchange. He has given several newspaper interviews and the man has also been a guest on Twitter Spaces. SBF’s comments have been confusing, to say the least.

Below is a video made by the popular internet detective Coffeezilla. It has two interviews where he was able to grill Bankman-Fried with some tough questions.

The video above summarizes well the tactic chosen by SBF. Before the collapse, he was one of the most famous figures in the crypto scene, a “golden boy”, a trading guru, and much more. Now the man doesn’t even seem to know how to tie his own shoelaces.

Several magazine interviews have also painted Bankman-Fried as a failed visionary instead of a criminal. This has made many crypto investors angry – for good reason.

SBF dodges and skirts questions regarding FTX’s and Alameda’s fund management, regulation, and so on. A master trader who made billions of dollars suddenly doesn’t know what happened in his own company He mainly regrets that he “made a big mistake”.

An interesting detail also came out in the recent interview with The Block. The auditing firms did not notice the missing customer funds, because they were not even part of the audit!

“Customer positions were not a part of FTX’s assets or liabilities”, comments SBF. What’s the point of a crypto exchange audit that doesn’t include clients’ funds?

The question of why SBF is in the Bahamas also comes up daily. The collapse of FTX is one of the biggest in economic history. For example, in Bernie Madoff’s Ponzi cost only about four billion dollars in the end. You would think that SBF is already in the United States awaiting a trial.

What about Alameda Research, which caused the whole debacle? There is still no detailed information about the company’s activities. Alameda CEO Caroline Ellison has been quiet & on the run for the past few weeks. At the weekend, Ellison was spotted out in New York. This sparked rumors that Ellison was making a deal with the US Attorney’s Office.

We will report more on the development of case FTX in the coming weeks. This mess is unlikely to be sorted out for a long time yet.

Is Genesis the next black swan?

We mentioned the word contagion at the beginning of the FTX news. This is still a very much grey area. Nobody knows what the liabilities of different companies are. Two big dominoes have so far collapsed as a result of FTX: a loan service BlockFi and a prime broker Genesis.

BlockFi announced that it would file for bankruptcy right after FTX went down. However, Genesis is a more confusing tangle. It is one of the biggest players in the crypto industry, especially among institutional customers. Genesis is owned by Digital Currency Group, which is also behind the Grayscale Bitcoin trust.

Genesis made headlines a couple of weeks ago when it halted withdrawals. At the same time, it turned out that the Gemini exchange (owned by the famous Winklevoss brothers) had outsourced its Earn yield feature to Genes. A couple of days ago, we received more detailed figures related to this case. Genesis owes as much as $900 million to Gemini customers.

A couple of weeks ago, many people wondered why the Winklevoss brothers don’t just offset their clients’ losses out of their own pockets. Now the reason for this decision became clear. Not even the Winklevoss brothers have an extra $900 million in their account. The scale of losses is massive.

And that’s not all. According to Coindesk, Genesis also has another creditor who is also collecting $900 million in debts. There is also a third creditor, but there is no information on the size of these losses. So, Genesis is definitely short 1.8 billion dollars.

Genesis has been trying to get additional funding for a couple of weeks now. At the moment, it is unclear how badly Genesis’ problems will radiate in the direction of its parent company, Digital Currency Group. If DCG were to collapse, the Grayscale Bitcoin Fund could theoretically go into liquidation. The fund holds 635,000 bitcoins.

Genesis & DCG are currently a big black swan that could still hit the crypto market at the end of 2022.

Chainlink’s staking is about to start

Chainlink is arguably one of the most important components of the DeFi industry. It was created to solve a fundamental problem with smart contracts. Smart contracts cannot read data outside the blockchain. This leads to a problem where data input from the outside (e.g. crypto price data) is exposed to corruption and could be under the control of a centralized operator.

Chainlink has created a decentralized network of oracles to solve the issue. When the data is supplied by independent oracles, one can easily verify its correctness. It is easy to differentiate the data input that stands out from the crowd.

Chainlink has practically become a standard for the DeFi sector. Its services are used by more than 1000 different dapps in many different blockchains. Chainlink is not its own blockchain, but rather a so-called middleware or collection of APIs. It can be integrated into different blockchains.

Although the service has gained immense popularity, the Chainlink price has not developed as expected. There may finally be a change in this matter because staking starts this week. Chainlink expert ChainLinkGod goes through the Chainlink staking in detail in the Twitter thread below.

Staking traditionally means that validators lock the blockchain’s native token to earn the right to create blocks. This happens in blockchains using Proof of Stake consensus. This is not the case with Chainlink.

Remember that Chainlink is not a blockchain but a completely independent application. Staking in this case means that Chainlink’s nodes (oracles) participate in data validation. The idea is to create a system where oracles monitor the quality of data inputs.

In the beta phase that is starting now, the ETH/USD price feed is tested. Nodes participating in the staking can raise alarms when they detect abnormal price data. In the future, an oracle that has transmitted incorrect information will lose part of its stake (so-called slashing).

In addition to operators, the system also has community stakers. These can be regular investors who want to delegate their LINK tokens to be staked by node operators. An annual return of approximately five percent is given.

The move will probably have a positive effect on the LINK price in the long run. The amount of staked LINK tokens in the Beta 0.1 version, which is now being published, is still limited.

Read more about Chainlink from our beginner’s guide.

Apple blocked a Coinbase wallet update

Last week, we received worrying news from Coinbase regarding Apple. What is the news really about?

Let’s do some housekeeping. This news is about the Coinbase Wallet app, which is a Web3 wallet created by Coinbase. It is a similar app to the popular MetaMask. Coinbase Wallet is therefore a separate mobile app where the user has full control over funds. It is not the same as the mobile app of the Coinbase exchange.

Last week, Coinbase broke the confusing news that iPhone users cannot send NFTs from their wallets. Hence, there is a problem related to Apple’s iOS operating system. The Twitter thread below explains why.

The background is Apple’s demand to get a 30% slice of NFT transaction fees, i.e. the so-called gas fee. According to Apple, NFT transactions should be paid for through its In-App Purchase system. Of course, this is by no means possible because these are blockchain transaction fees.

In a tweet thread, Coinbase compares the situation to one where Apple wants money for every email sent through iOS. Due to the controversy, Apple has blocked the latest Coinbase wallet update.

If someone imagines that this is only a problem with Coinbase or, for example, the Ethereum network, they are wrong. There is nothing stopping Apple from making the same claim for every Bitcoin wallet. The company has just first set its sights on the largest and best-known player in the field.

MetaMask is another popular Web3 wallet. Its founder Dan Finlay stood by Coinbase in the dispute and called on the entire crypto sector to ditch iOS if Apple doesn’t give up its endless demands. “I assume MetaMask and every other wallet is next”, Finlay reflects.

Coinbase Wallet was in the headlines a week ago for another reason as well. Coinbase announced that it is ending support for the following cryptocurrencies: Bitcoin Cash, Ethereum Classic, XRP, and Stellar Lumens. According to the company, the reason is that there is too little use for these cryptos.

This is not a huge surprise when you look at the coins involved. If you own those cryptos in the Coinbase Wallet, you should move them out before January. You can also use the recovery words to clone the wallet to another wallet app that still supports cryptocurrencies.

Let’s underline that this news also does not concern the Coinbase exchange or its mobile app. Coinbase Wallet is a completely separate app.

Nexo withdraws from the US market

The field of crypto loan services has experienced quite an upheaval in 2022. Just a year ago, the sector was dominated by three players: Celsius, BlockFi, and Nexo. Nexo is the only remaining service now. Celsius already crashed in the summer, and BlockFi fell after the collapse of FTX a couple of weeks ago.

In addition to Celsius and BlockFi, half a dozen smaller loan services have also gone out of business. Nexo has managed to avoid all pitfalls so far, although the company has offered exactly the same interest rate on deposits as its competitors.

Nexo was in the headlines yesterday in connection with the United States.

According to Nexo, the company has been trying to gain a foothold in the United States for 18 months. It has been in constant dialogue with the country’s authorities but decided to withdraw due to the lack of clarity in regulation.

The finger of blame is once again pointed in Gary Gensler’s direction. The SEC boss has been in the headlines in recent weeks also after the collapse of FTX. Many blame Gensler that his agency’s attitude having driven FTX offshore because the companies haven’t been able to register in the United States. The case of Nexo is one example of this.

We recommend our readers reconsider using loan services and different interest accounts. We have seen numerous loan service bankruptcies in 2022, which means that there are clear risks in the sector. Is collecting a few percent annual interest right now worth the risk? You can always deposit the funds back when the market direction turns positive.

For example, Celsius fell in the bank run triggered by social media, just like FTX a month ago. Without this, both would continue to operate normally. All it takes is a small social media buzz or worrying news, and a bank run can occur on any service. The consequences can be fatal if the service does not have enough liquid funds to process each withdrawal.


We are the AboutBitcoin team, a group of experienced crypto specialists with a deep focus on the cryptocurrency market since 2017. Our team delivers weekly fresh insights from the dynamic world of crypto. Join us on an exciting journey of exploration as we navigate the rapidly evolving landscape of cryptocurrencies!