cryptocurrency

SoftBank writes down nearly $100 million investment in FTX • ZebethMedia

By zebethcontrolPosted on November 14, 2022Posted in Crypto, cryptocurrency, FTX, Softbank, VentureNo Comments

As more details emerge regarding the events that led to FTX’s bankruptcy and stunning collapse, the cryptocurrency exchange’s investors are also being scrutinized. Namely, many people are asking just how could so many high-profile investment firms pour a collective $2 billion with apparently so little due diligence. The notorious Japanese investment conglomerate SoftBank, for example, is just one of many such firms that backed FTX after the startup raised a $400 million funding round in January, valuing the company at a staggering $32 billion. SoftBank, which invested as part of its Vision Fund 2, revealed days ago that it sunk just under $100 million into the company. That investment is now marked down to zero with SoftBank saying “it would not face a material markdown in the value of its stake,” according to MarketWatch. Of course it’s not the first time SoftBank has made an, er, error in judgment when it comes to its investment. It (in)famously poured at least $18.5 billion into WeWork, which along with its co-founder Adam Neumann, spectacularly fell from grace. SoftBank also put money in Katerra, a construction tech startup that also burned through more than $2 billion in funding before shutting down in June 2021. The firm also loaned $100 million to blood testing company Theranos in 2017 through a private equity arm. And it also pumped $500 million into digital mortgage lender Better.com before signing up to co-lead its never materialized SPAC. That company has been the subject of various scandals over the past year and has been struggling in the face of rising mortgage interest rates, a slowed housing market and volatile CEO. ZebethMedia has reached out to SoftBank for comment on its investment in FTX. On November 12, Nikkei Asia reported that SoftBank Group had “lost all the cumulative investment gains it had made through its Vision Fund business as global rate rises and a weakening economic outlook hammered the valuations of portfolio companies.” The publication went on to add that the “Vision Funds’ unrealized gains since the start of investment in 2017 fell to negative $1.46 billion in the July-September period, down from positive $8.49 billion three months ago, according to its quarterly earnings presentation.” SoftBank’s disclosure regarding its FTX investment came soon after Sequoia Capital also marked down to zero the value of its stake in FTX — “a stake that accounted for a minor percentage of Sequoia’s capital but as of last week likely represented among the most sizable unrealized gains* in the venture firm’s 50-year history,” as reported by TC’s Connie Loizos on November 9. But Sequoia had egg on its face for more than just putting capital into FTX. It also very recently (in late September) published on its website what Bloomberg described as a “ long, meandering profile of Sam Bankman-Fried, a.k.a. SBF, the now-disgraced founder of the bankrupt cryptocurrency exchange FTX.” Ironically entitled “Sam Bankman-Fried Has a Savior Complex — And Maybe You Should Too,” the 14,000 (yes, you read that right) piece was apparently “prominently displayed on the Sequoia website, right underneath the dictum, ‘We help the daring build legendary companies,’ ” as reported by Bloomberg. Unsurprisingly, as more details came out around the goings-on within FTX, that piece was taken down. Bankman-Fried stepped down from his role as CEO of FTX on November 10. The New York Times reported earlier today that “Pantera Capital and Galois became the latest hedge funds to announce losses tied to FTX, $130 million and $40 million, respectively.” Also among FTX’s long roster of investors are: NEA, IVP, Iconiq Capital, Third Point Ventures, Tiger Global, Altimeter Capital Management, Lux Capital, Mayfield, Insight Partners, Lightspeed Venture Partners, Ribbit Capital, Temasek Holdings, BlackRock and Thoma Bravo. Got a news tip or inside information about a topic we covered? We’d love to hear from you. You can reach TKTKT at TKTK or TKTKT. Or you can drop us a note at tips@techcrunch.com. If you prefer to remain anonymous, click here to contact us, which includes SecureDrop (instructions here) and various encrypted messaging apps.

Binance’s plan to acquire FTX is ‘real-life Game of Thrones’ as crypto winter winds blow • ZebethMedia

By zebethcontrolPosted on November 8, 2022Posted in Binance, Crypto, crypto ecosystem, crypto exchanges, cryptocurrency, EC Blockchain, EC Cryptocurrency, FTXNo Comments

Binance, the world’s largest crypto exchange by volume, has signed a letter of intent to buy its closest competitor, FTX, making huge waves in the crypto community after the putative billionaire CEOs of the exchanges engaged in a multi-day public dispute on Twitter. “It’s like real-life ‘Game of Thrones,’” Alex Taub, founder and CEO of DAO-focused platform Upstream, said to ZebethMedia in a message. Today’s acquisition news was bigger than the HBO show’s dramatic “Red Wedding” massacre scene. FTX was quick to spin the potential sale of its business as a win. “A *huge* thank you to [Changpeng “CZ” Zhao], Binance, and all of our supporters,” FTX founder and CEO Sam Bankman-Fried said in a tweet on Tuesday regarding the deal. “This is a user-centric development that benefits the entire industry. CZ has done, and will continue to do, an incredible job of building out the global crypto ecosystem, and creating a freer economic world.” But it’s a slam-dunk outcome for Binance after a heated spat. Investors, founders, and operators throughout the crypto community noted that the deal makes Binance appear strong amid a bear market for the sector while raising questions about FTX’s solvency and financial performance. “It’s crypto winter now, and it’s time when the market checks everyone for weakness,” Serhii Zhdanov, CEO of cryptocurrency exchange EXMO, said to ZebethMedia. “Exchanges as main players bear the main damage because of low liquidity, while their main income is from trading fees. It’s enough to check the change [in] trading volumes for the last year to understand how tough the situation is. “Naturally, it’s time of mergers and acquisitions,” Zhdanov said. “We might see more such stories in the near future.”

FTX’s seemingly sluggish withdrawals raise eyebrows • ZebethMedia

By zebethcontrolPosted on November 8, 2022Posted in Crypto, crypto exchanges, cryptocurrency, ethereum, FTX, stablecoinNo Comments

Withdrawal transactions for customers using FTX, the third largest crypto exchange by volume, have seemingly been limited to a nominal amount or none at all, according to multiple on-chain data sources. Stablecoin withdrawals from FTX dropped to zero around 6 a.m. ET on Tuesday, according to data on CryptoQuant. Meanwhile, withdrawals of ether, Ethereum’s token, have been small during the same time frame, CryptoQuant data also showed. Etherscan data also revealed that FTX withdrawals are currently executing for up to 0.12, or about $170.79, of ether. “As FTX’s net crypto asset holdings decreased by 83% over the past two days, they seem to be struggling to process withdrawals,” Ki Young Ju, CEO and co-founder of CryptoQuant, said to ZebethMedia. “For example, when their users exchange ETH for stablecoins and request withdrawals, FTX has to bring stablecoin liquidity to process the withdrawal via markets or other exchanges.” FTX’s stablecoin reserve also decreased 93% over the past two weeks, and it has injected USDC liquidity from Alameda Research wallets, Ju said. “This suspension of withdrawals seems to be a liquidity problem for user withdrawals.” A spokesperson from FTX did not reply to ZebethMedia’s request for comment. Some individuals in the crypto community tweeted that they “successfully withdrew” ethereum and bitcoin from FTX, while others replied that they have been waiting hours to withdraw funds. Last night, FTX tweeted that its team has been processing the backlog of withdrawals and added that the “queue is decreasing and getting back to more reasonable levels; nodes and banks catching up.” Since then, FTX and its CEO, Sam Bankman-Fried, have not released any statements regarding the pause, as of the time of publication. The situation has transpired as FTX is facing heat from the world’s largest crypto exchange, Binance, after its CEO, Changpeng “CZ” Zhao, tweeted that his exchange would slowly withdraw billions of its holdings in FTX’s native token, FTT. On Monday, Bankman-Fried tried to calm the waters in regard to FTX’s liquidity via a series of tweets indirectly responding to Zhao and Binance’s liquidations. “A competitor is trying to go after us with false rumors,” Bankman-Fried said. “FTX is fine. Assets are fine.” Bankman-Fried said FTX has enough to cover all client holdings and it doesn’t invest in client assets. He then tweeted he would “love” if Zhao and FTX could “work together for the ecosystem.” FTT is currently trading at $14.65, down about 35%, according to data from CoinMarketCap.

Here’s the rundown on the Binance and FTX fiasco • ZebethMedia

By zebethcontrolPosted on November 7, 2022Posted in Binance, Crypto, crypto markets, cryptocurrency, EC Blockchain, EC Cryptocurrency, FTX, marketsNo Comments

The largest crypto exchange by volume (Binance) and the third largest crypto exchange by volume (FTX) faced off in recent days after Binance CEO Changpeng “CZ” Zhao tweeted that his exchange would slowly withdraw billions of its holdings in FTX’s native token, FTT, “due to recent revelations that have came to light.” But first, let’s take a few steps back. Concerns surrounding FTX’s liquidity grew following a Thursday report from CoinDesk about the balance sheet of Alameda Research, a crypto trading firm once run by FTX CEO Sam Bankman-Fried. Alameda holds $14.6 billion in assets with $8 billion in liabilities as of June 30, CoinDesk reported. The report showed Alameda’s largest asset was about $3.66 billion of “unlocked FTT” and $2.16 billion of “FTT collateral.” (FTT is the token behind FTX.) This means the $5.82 billion in total FTT that Alameda owns is equal to 193% of the total known FTT market cap, which is about $3 billion, according to CoinMarketCap data. Image Credits: CryptoQuant (opens in a new window) “The issue is that Alameda cannot sell even small amounts of their FTT holdings without heavily impacting the price,” Marcus Sotiriou, an analyst at the publicly listed digital asset broker GlobalBlock, said in a note. “Data from CryptoQuant […] tells us that there are only around 200-300 active addresses trading the FTT token, which is very small in comparison to many other large caps. Hence, large sell orders would crash the FTT price, due to being illiquid.”

US DOJ announces seizure of $3.36B in cryptocurrency • ZebethMedia

By zebethcontrolPosted on November 7, 2022Posted in Bitcoin, Crypto, cryptocurrency, silk road, us governmentNo Comments

The U.S. Department of Justice on Monday announced that law enforcement seized $3.36 billion of bitcoin from a man who “unlawfully obtained” over 50,000 bitcoin from darkweb market Silk Road over a decade ago. The U.S. Attorney for the Southern District of New York said that James Zhong of Gainesville, Georgia, pleaded guilty on November 4 to committing wire fraud in September 2012. The charge carries a maximum sentence of 20 years in prison. The plea came almost a year after law enforcement seized 50,676.17851897 bitcoin, then valued at over $3.36 billion, from Zhong’s home, the statement said. Officials found the bitcoin in an underground floor safe and on a single-board computer that was hidden under blankets in a popcorn tin placed in a bathroom closet. Law enforcement also recovered $661,900 in cash, 25 Casascius coins of bitcoin (valued at about 174 bitcoin), an additional 11.116 bitcoin, and a handful of silver- and gold-colored bars. The whereabouts of this massive amount of bitcoin was a mystery for almost 10 years, U.S. Attorney Damian WIlliams said in the release. It was the largest cryptocurrency seizure in the history of the U.S. DOJ at the time, and today remains the department’s second-largest financial seizure, it stated. Silk Road was an online black market that was launched in 2011 by the then-anonymous “Dread Pirate Roberts” (later uncovered as Ross Ulbricht). It was notoriously known for money laundering activities and for buying and selling illegal drugs with bitcoin. In under two years, the Silk Road was shut down by the U.S. governmen,t and by 2015, Ulbricht was unanimously convicted by a jury and sentenced to life in prison. “This case shows that we won’t stop following the money, no matter how expertly hidden, even to a circuit board in the bottom of a popcorn tin,” Williams said.

Singapore may soon require retail investors to take test before trading crypto, prohibit credit cards • ZebethMedia

By zebethcontrolPosted on October 26, 2022Posted in Asia, Crypto, cryptocurrency, SingaporeNo Comments

Singapore may soon require retail investors to take a test and not use credit card payments and other forms of borrowing for trading cryptocurrencies, the central bank proposed on Wednesday in a series of measures as the island nation looks to make citizens aware of the risks surrounding volatile assets. The Monetary Authority of Singapore said in a set of consultation papers that it’s worried that many retail customers may “not have sufficient knowledge of the risks of trading” digital payment tokens, which may lead them “to take on higher risks than they would otherwise have been willing, or are able, to bear.” Several popular crypto exchanges already require their customers to periodically sift through questionnaires before they are allowed to trade crypto and participate in derivatives trading. The central bank acknowledged [PDF] that a number of industry players are supportive of some form of assessment on the retail customer’s knowledge of risks. The central bank has also proposed that stablecoin issuers make adequate disclosures about their tokens and hold reserve assets in cash, cash equivalent or debt securities that are “at least equivalent to 100% of the par value of the outstanding” tokens in circulation “at all times.” The debt securities, the proposal says, should be issued by the central bank of the pegged currency or organizations that are both a governmental and international character with a credit rating of at least AA—. “SCS [single-currency pegged stablecoins] issuers must obtain independent attestation, such as by external audit firms, that the reserve assets meet the above requirements on a monthly basis. This attestation, including the percentage value of the reserve assets in excess of the par value of outstanding SCS in circulation, must be published on the issuer’s website and submitted to MAS by the end of the following month (for the month being attested),” the proposal says [PDF], adding that issuers also must appoint an external auditor to conduct an annual audit of its reserve assets and submit the report to MAS. The proposal marks a major shift in Singapore’s stance on crypto. Once a preferred global crypto hub for its policies, Singapore authorities have toughen their views of digital assets following the collapse of a series of firms including Terraform Labs’ stablecoin UST and native token LUNA, and hedge fund Three Arrows Capital. (More to follow)

Pillow wants to make crypto saving and investing easy for new users • ZebethMedia

By zebethcontrolPosted on October 13, 2022Posted in Asia, Crypto, cryptocurrency, Pillow, Singapore, Southeast Asia, StartupsNo Comments

Pillow aspires to be an all-in-one platform that helps even newbie users save, spend and invest in crypto currency. The Singapore-based startup announced it has raised $18 million in Series A financing co-led by Accel and Quona Capital, with participation from Elevation Capital and Jump Capital. The app currently has more than 75,000 users in over 60 countries. It supports 10 digital assets, including Bitcoin, Ethereum, Solana, Polygon, Axie Infinity and USD-backed stablecoins USDC and USDT, and plans to expand to over 50 assets in the coming months. Founded in 2021 by Arindam Roy, Rajath KM and Kartik Mishra, Pillow is focused on emerging markets like Africa and Southeast Asia. It founders say that since the beginning of the year, it has grown its user base by 300%, with assets under management growing 5x. It also recently expanded into Nigeria, Ghana and Vietnam, among other markets. Before founding Pillow, Roy and KM explored web3 while working at identity verification and AML software provider HyperVerge, while also holding jobs in the traditional finance industry. During this time, the two started a Discord server on the side to onboard people onto web3, which eventually grew to more than 15,000 people. “We saw a pattern of problems repeating,” the two told ZebethMedia. “People do not know how to pay gas fees, do not know how to bridge across various blockchains, people do not know what transaction they are approving and end up losing funds.”Around this time, the two met Mishra, who was head of business for Indian delivery startup Dunzo, and started talking about how to solve the onboarding problem at scale. “Eventually, we realized that the challenge is that crypto transactions today do not fit the mental model of how retail users perceive transactions. You would need a strong technical background to transact seamlessly in crypto,” they said. As a result, Pillow was born to make crypto usage understandable. To do this, the Pillow team has to tackle a couple big issues. The first is awareness, since the majority of people still think crypto is just buying and selling Bitcoin, without understanding other use cases. The second is complexity, since using crypto in its entirety means understanding gas fees, blockchain technology and bridging. “A person who just wants to transact is not going to scale this learning curve,” they said. Pillow solves these problems by simplifying crypto investments and transactions to one click, instant swaps and savings using single-click daily interest savings. It plans to do the same for other crypto services like payments. To use Pillow for the first time, people sign up using their email accounts, and then provide KYC information, such as live selfie photos and national identity cards. Afterward, they get a short lesson on the potential risks of investing in digital assets before choosing which ones they want to deposit or invest in. Before their initial investment, they are taken through another lesson about that asset’s potential risks. After that, they can deposit cryptocurrency from their own wallets or another crypto platform by making a transfer to the displayed crypto wallet address on Pillow. In some countries where Pillow has partnered with local, compliant on-ramp service providers, users can also buy crypto with their local fiat currency. Pillow supports deposits and withdrawals with fiat currency through local partnerships in Nigeria, the Philippines and Vietnam, with plans to add more across Southeast Asia, Africa and Latin America with its new funding. The startup’s largest user base is in Nigeria, and it also has a major presences in India, Ghana and Vietnam, and growing user bases in Brazil, the Philippines and Sri Lanka. It focuses on retail investors, enabling them to start with investments as small as $5. Since Pillow’s users are from different geographies, its closest competitors also come from around the world. They include crypto exchange Luno in Africa, multi-asset exchange Pluang (another Accel investment) in Southeast Asia and global crypto savings app Nexo. Pillow’s founders says it differentiates with its goal of becoming a holistic home for digital asset-driven financial services that allows even first time crypto users users to earn, save, spend and invest from the same platform. Pillow is currently in growth phase and plans on introducing transaction fees as new products, including swaps and tokenized real world assets are introduced. It currently makes profits on returns generated on top of the 5% to 10.42% returns made accessible to users. Pillow keeps a small percentage of the spread generated, and another portion also goes into its yield reserves.