{"id":24616,"date":"2023-01-25T23:58:10","date_gmt":"2023-01-25T23:58:10","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=24616"},"modified":"2023-01-26T01:56:41","modified_gmt":"2023-01-26T01:56:41","slug":"crypto-collapse-us-banks-leave-crypto-how-genesis-kept-gemini-hanging-on-ftx-binance-nexo","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2023\/01\/25\/crypto-collapse-us-banks-leave-crypto-how-genesis-kept-gemini-hanging-on-ftx-binance-nexo\/","title":{"rendered":"Crypto collapse: US banks leave crypto, how Genesis kept Gemini hanging on, FTX, Binance, Nexo"},"content":{"rendered":"<p><i>By <\/i><b><i>Amy Castor<\/i><\/b><i> and <\/i><b><i>David Gerard<\/i><\/b><\/p>\n<ul>\n<li aria-level=\"1\">For your convenience, <em>we<\/em> still have banking. Put your money into our Patreons in confidence \u2014 here\u2019s<a href=\"https:\/\/www.patreon.com\/amycastor\"> Amy\u2019s<\/a>, and here\u2019s<a href=\"https:\/\/www.patreon.com\/davidgerard\/overview\"> David\u2019s<\/a>.<\/li>\n<li aria-level=\"1\">Our patrons can also get a couple of <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2021\/05\/bitcoin-it-cant-be-that-stupid.png\">\u201cBitcoin: It Can\u2019t Be That Stupid<\/a>\u201d stickers just by messaging one of us and asking.<\/li>\n<li aria-level=\"1\">David has<a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2020\/11\/26\/get-signed-copies-of-libra-shrugged-and-attack-of-the-50-foot-blockchain\/\"> signed author copies of his books<\/a> for sale. OVERSEAS MAIL FROM THE UK IS CURRENTLY DELAYED, as the Royal Mail got ransomwared! [<a href=\"https:\/\/www.bbc.co.uk\/news\/business-64324000\"><i>BBC<\/i><\/a>]<\/li>\n<li aria-level=\"1\">Sign up on<a href=\"https:\/\/amycastor.com\/\"> Amy\u2019s blog<\/a> to see every new post she makes as it goes up, and<a href=\"https:\/\/davidgerard.co.uk\/blockchain\/#byemail\"> click here and enter your email address<\/a> for every new post on David\u2019s blog as it goes up.<\/li>\n<\/ul>\n<p>\u201cNormalize thinking of con artistry as a predatory crime that largely targets the vulnerable rather than a glamorous caper.\u201d <i>\u2014 <\/i><a href=\"https:\/\/twitter.com\/BeijingPalmer\/status\/1616446624691277825\"><i>James Palmer<\/i><\/a><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: center;\"><a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/01\/25\/crypto-collapse-us-banks-leave-crypto-how-genesis-kept-gemini-hanging-on-ftx-binance-nexo\/europe_boardman_robinson\/\" rel=\"attachment wp-att-24617\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-24617\" src=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/01\/europe_boardman_robinson.jpg\" alt=\"\" width=\"510\" height=\"315\" srcset=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/01\/europe_boardman_robinson.jpg 680w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/01\/europe_boardman_robinson-300x185.jpg 300w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/01\/europe_boardman_robinson-348x215.jpg 348w\" sizes=\"auto, (max-width: 510px) 100vw, 510px\" \/><\/a><\/p>\n<p style=\"text-align: center;\"><small><a href=\"https:\/\/commons.wikimedia.org\/wiki\/File:Europe_Boardman_Robinson.jpg\"><i>Europe 1916<\/i><\/a> by <a class=\"extiw\" title=\"w:Boardman Robinson\" href=\"https:\/\/en.wikipedia.org\/wiki\/Boardman_Robinson\">Boardman Robinson<\/a><\/small><\/p>\n<p>&nbsp;<\/p>\n<h3>How Genesis kept Gemini hanging on<\/h3>\n<p>As a group, Gemini Earn\u2019s retail customers are the largest creditor of Genesis.<\/p>\n<p>According to Genesis\u2019 Chapter 11 bankruptcy filings, Genesis owes Gemini Earn customers $785 million. Cameron Winklevoss of Gemini said $900 million, but we guess $785 million was the value of the crypto on the day of the petition.<\/p>\n<p>How did Gemini get themselves into this mess?<\/p>\n<p>Genesis was technically insolvent in July 2022 when Three Arrows Capital (3AC) imploded and blew a massive hole in their books. The Winklevoss twins should have shut down Gemini Earn right then and ended their partnership with Genesis \u2014 but they chose not to.<\/p>\n<p>By July, the crypto collapse was in full swing. Maybe the Winklevosses crossed their fingers and thought everything was <i>probably survivable<\/i> when Genesis\u2019 parent company <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/01\/12\/crypto-collapse-dcgs-check-kiting-comes-home-to-roost-nexo-raided-voyager-sale-to-binance-progresses-unbanking-the-banked\/\">Digital Currency Group (DCG) issued a $1.1 billion IOU to Genesis<\/a> to fill the gaping void left by 3AC.<\/p>\n<p>Or maybe it was because Genesis pledged 31 million shares of GBTC as collateral for Gemini Earn in August 2022.<\/p>\n<p>GBTC is a <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/01\/15\/crypto-collapse-bitcoin-goes-up-nexo-charged-gbtc-still-wants-to-be-an-etf-crypto-exchanges-struggle-ftx-voyager\/\">bitcoin-backed fund<\/a> run by Grayscale. Like Genesis, Grayscale is owned by DCG. <a href=\"https:\/\/amycastor.com\/2022\/04\/19\/welcome-to-grayscales-hotel-california\/\">GBTC used to trade <i>above<\/i><\/a> the price of the bitcoins backing the fund. Since early 2021, GBTC has been trading well below par.<\/p>\n<p>By early November, FTX was starting to wobble hard. So on November 10, Genesis pledged <i>another<\/i> 31 million shares of GBTC to secure Gemini Earn loans \u2014 except that Genesis never delivered those shares.<\/p>\n<p>On November 16 \u2014 the same day that Genesis froze withdrawals because FTX had imploded \u2014 Gemini sold that first pledge of 31 million GBTC to a private buyer for $284 million ($9.20 per share), and applied the money against their claim. [<a href=\"https:\/\/restructuring.ra.kroll.com\/genesis\/Home-DownloadPDF?id1=MTQzOTc1Ng==&amp;id2=-1\"><i>Declaration of Michael Leto<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>DCG was probably horrified by this \u2014 the last thing they wanted was more GBTC shares diluting the market and upsetting already pissed-off GBTC holders.<\/p>\n<p>Genesis is now saying that Gemini\u2019s sale of the shares was not conducted &#8220;in accordance with the notice requirements set forth in the Uniform Commercial Code.&#8221; They appear to be trying to use this as an excuse to void the remaining claim altogether. [<a href=\"https:\/\/www.axios.com\/2023\/01\/23\/genesis-gemini-earn-bankruptcy\"><i>Axios<\/i><\/a>]<\/p>\n<p>Ram Ahluwalia, the cofounder of crypto investment advisory Lumida, thinks Gemini\u2019s massive sale of 31 million GBTC in November crashed the price of GBTC and widened the discount to nearly 50%. [<a href=\"https:\/\/twitter.com\/ramahluwalia\/status\/1617315466669879298\"><i>Twitter<\/i><\/a>]<\/p>\n<p>Elsewhere, GGC International, a unit of Genesis Global, which filed for bankruptcy, is looking to recover $20.9 million from Roger Ver over crypto options trades that weren\u2019t settled. Ver had <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2022\/06\/29\/coinflex-gets-roger-verified\/\">similar issues last year with CoinFLEX<\/a>. [<a href=\"https:\/\/www.offshorealert.com\/ggc-international-ltd-v-roger-ver-summons-with-notice-failure-to-settle-20m-expired-crypto-options\/\"><i>Offshore Alert<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.coindesk.com\/tech\/2023\/01\/24\/genesis-seeks-209m-from-bitcoin-jesus-over-crypto-options-trades-that-werent-settled\/?utm_medium=social&amp;utm_campaign=coindesk_main&amp;utm_source=twitter&amp;utm_term=organic&amp;utm_content=editorial\"><i>CoinDesk<\/i><\/a>]<\/p>\n<h3>Genesis chapter 11: First day<\/h3>\n<p>Genesis had its first day bankruptcy hearing on January 23. The company is being represented by the law firm Cleary Gottlieb. Molly White live-tweeted the hearing. [<a href=\"https:\/\/restructuring.ra.kroll.com\/\/genesis\/Home-DownloadPDF?id1=MTQzOTk0OA==&amp;id2=0\"><i>Presentation<\/i><\/a><i>, PDF<\/i>; <a href=\"https:\/\/twitter.com\/molly0xFFF\/status\/1617601249678921738\"><i>Twitter<\/i><\/a>]<\/p>\n<p>Genesis\u2019 lawyers were <i>very<\/i> optimistic about the future \u2014 way more than anyone who knows crypto would consider credible \u2014 while dismissing the company\u2019s past missteps. Sean O\u2019Neal for Genesis: \u201cWe\u2019d like to talk less about where we\u2019ve been and more about where we are going.\u201d Sure you would.<\/p>\n<p>Genesis CEO Michael Moro stepped down in August. On November 18, the company formed a special committee, with directors <a href=\"https:\/\/www.linkedin.com\/in\/paul-aronzon-364050b\">Paul <\/a>Aronz<a href=\"https:\/\/www.linkedin.com\/in\/paul-aronzon-364050b\">on<\/a> and Thomas Conheeney. Aronzon and Conheeney are the ones guiding the company through bankruptcy.<\/p>\n<p>Assets: Genesis has more than $2 billion in outstanding loans. They have $150 million in cash, $500 million in (unspecified, and probably illiquid) digital assets, and $385 million in shares in brokerage accounts \u2014 presumably GBTC, but they didn\u2019t specify.<\/p>\n<p>Genesis had $5.1 billion in liabilities as of November 30, according to a declaration signed by Genesis Global Holdco interim CEO Derar Islim. [<a href=\"https:\/\/restructuring.ra.kroll.com\/genesis\/Home-DownloadPDF?id1=MTQzOTEyMQ==&amp;id2=-1\"><i>Declaration<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>The special committee and Cleary Gottlieb have been negotiating with two ad-hoc Genesis creditor groups and DCG \u2014 Genesis\u2019 parent company and largest borrower \u2014 to come up with a plan to pay back the loans.<\/p>\n<p>Genesis wants to sell its assets. If they can\u2019t sell their business, they plan to give creditors equity shares in Genesis Global Holdco \u2014 shares in a washed-up company that&#8217;s currently being scrutinized by the SEC and DOJ. The idea is for Genesis to continue operations in the future, because you\u2019re supposed to promise that in Chapter 11 bankruptcy. DCG will not long have any affiliation or controlling interest in the business, apparently.<\/p>\n<p>Most of the creditors are institutional investors \u2014 this is all just business. The Gemini Earn customers are the retail investors, and they\u2019re screaming and will continue to scream.<\/p>\n<p>DCG posted a public letter on Genesis filing bankruptcy. [<i>DCG, <\/i><a href=\"https:\/\/archive.is\/wip\/A5B1b\"><i>archive<\/i><\/a>]<\/p>\n<p>Frances Coppola writes on how Genesis wrecked DeFi lender Donut. Donut loaned Genesis $78 million, representing 99.55% of their total AUM. Worse, all of Donut&#8217;s loans to Genesis are unsecured. \u201cJust like Voyager, Celsius and BlockFi, ordinary people will pay the price for Donut&#8217;s mis-selling, mismanagement and dishonesty.\u201d [<a href=\"https:\/\/www.coppolacomment.com\/2023\/01\/hollow-promises.html\"><i>Coppola Comment<\/i><\/a>]<\/p>\n<p>In the meantime, the Gemini crypto exchange will be laying off another 10% of staff. This is their third round of layoffs. [<a href=\"https:\/\/www.theblock.co\/post\/204738\/gemini-lays-off-10-of-staff-amid-troubles-at-genesis-dcg-the-information\"><i>The Block<\/i><\/a>]<\/p>\n<p>Grayscale CEO Michael Sonnenshein goes on CNBC Squawkbox to point fingers at the SEC. Becky Quick asks him why Grayscale doesn\u2019t just liquidate the trust and return the bitcoins to GBTC holders, or lower its fees now instead of blowing hot air. [<a href=\"https:\/\/twitter.com\/SquawkCNBC\/status\/1617877174115241984\"><i>Twitter<\/i><\/a>]<\/p>\n<h3>Binance is fine, you\u2019re just holding it wrong<\/h3>\n<p>Binance has admitted to further management issues with stablecoin assets \u2014 after getting caught. Some of the tokens on Binance\u2019s BNB blockchain aren\u2019t fully backed.<\/p>\n<p>Binance-pegged tokens, sometimes called \u201cB-Tokens,\u201d are wrapped versions of outside tokens that Binance issues on its own BNB chain \u2014 and they don\u2019t have sufficient backing. [<a href=\"https:\/\/fortune.com\/crypto\/2023\/01\/18\/binance-admits-to-further-management-issues-with-stablecoin-assets\/\"><i>Fortune<\/i><\/a><i>, <\/i><a href=\"https:\/\/archive.is\/XFcuc\"><i>archive<\/i><\/a><i>, paywalled<\/i>]<\/p>\n<p>USDC and USDT are only available on the BNB chain as wrapped tokens, and the reserve for these coins is managed much like the reserve for BNB-BUSD. That is, <a href=\"https:\/\/amycastor.com\/2023\/01\/08\/crypto-collapse-dcgs-problem-is-grayscale-ftx-bahamas-agreement-defi-trading-arrest-silvergate-bank-huobi-binance\/\">just as badly.<\/a><\/p>\n<p>During the Terra-Luna collapse, Binance printed unbacked Binance-pegged stablecoins in huge quantities. [<a href=\"https:\/\/datafinnovation.medium.com\/further-binance-peg-token-problems-8db6a2cc20c3\"><i>Data Finnovation<\/i><\/a>]<\/p>\n<p>Binance also admitted to keeping collateral for almost half of its ninety-four Binance-pegged tokens \u2060\u2014 worth over $539 million \u2060\u2014 mixed up with customer funds inside a $16.5 billion exchange wallet. The exchange calls this blatant commingling a \u201cmistake.\u201d [<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2023-01-24\/binance-bnb-acknowledges-storing-users-crypto-with-reserves-in-error\"><i>Bloomberg<\/i><\/a>]<\/p>\n<p>Despite claims to the contrary, Binance is far from fully reserved. If it were fully reserved, it wouldn&#8217;t have to keep suspending withdrawals. [<a href=\"https:\/\/twitter.com\/ParrotCapital\/status\/1615306785375780865\"><i>Twitter<\/i><\/a>]<\/p>\n<p>Binance US is still sending customers through an <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/01\/15\/crypto-collapse-bitcoin-goes-up-nexo-charged-gbtc-still-wants-to-be-an-etf-crypto-exchanges-struggle-ftx-voyager\/\">endless KYC loop<\/a> rather than letting them withdraw their funds. [<a href=\"https:\/\/twitter.com\/ParrotCapital\/status\/1617808678102630400\"><i>Twitter<\/i><\/a>]<\/p>\n<h3>Signature Bank cuts off Binance<\/h3>\n<p>Binance sent a notice to customers that starting February 1, their banking partner, Signature, would not be processing SWIFT transfers of less than $100,000.<\/p>\n<p>Retail customers of Binance have until the end of the month to get their US dollars off the exchange. After that, their money is stuck.<\/p>\n<p>Rumors are swirling around this \u2014 not helped by an early news report (rapidly corrected) claiming that the SWIFT system itself was cutting off <em>all<\/em> crypto exchanges. Here are the facts that we know so far:<\/p>\n<ul>\n<li aria-level=\"1\">Binance is cut off from Signature for transactions below $100,000.<\/li>\n<li aria-level=\"1\">Signature\u2019s other exchange customers have not said they\u2019re affected, and we haven\u2019t seen their customers saying so either.<\/li>\n<li aria-level=\"1\">We haven\u2019t heard of other banks putting such a condition on Binance or another exchange.<\/li>\n<\/ul>\n<p>So it&#8217;s so far just Binance, via Signature.<\/p>\n<p>It\u2019s true, however that some US banks were so tempted by crypto riches that they screwed up a license to literally print money. The regulators have their angry trousers on, and their T-shirt saying <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/01\/12\/crypto-collapse-dcgs-check-kiting-comes-home-to-roost-nexo-raided-voyager-sale-to-binance-progresses-unbanking-the-banked\/\">&#8220;HIGHLY LIKELY TO BE INCONSISTENT WITH SAFE AND SOUND BANKING PRACTICES&#8221;<\/a> is raising a lot of questions that Signature and Silvergate should already have answered.<\/p>\n<p>Offshore exchanges are taking heed and lining up shadow banks instead, such as Advanced Cash Limited and Mercuryo. Advcash\u2019s clients include Binance, Huobi, OKCoin, and Nexo. It turns out this company is operating out of Eastern Europe and Russia. Mercuryo directors Peter Kozyakov and Alexander Vasilev and Advcash CEO Yaacov Bitton were involved in the Native Video Box ICO in 2018, which rugpulled investors for $6 million. [<a href=\"https:\/\/dirtybubblemedia.substack.com\/p\/the-russian-linked-payment-processors\"><i>Dirty Bubble<\/i><\/a>]<\/p>\n<p>Signature Bank\u2019s Q4 2022 numbers are in, and its excuses are bad. The bank is bleeding deposits \u2014 both crypto and non-crypto \u2014 and it&#8217;s blaming the Fed. [<a href=\"https:\/\/www.fool.com\/earnings\/call-transcripts\/2023\/01\/17\/signature-bank-sbny-q4-2022-earnings-call-transcri\/\"><i>Motley Fool<\/i><\/a><i>; <\/i><a href=\"https:\/\/investor.signatureny.com\/pme\/press-releases\/news-details\/2023\/Signature-Bank-Reports-2022-Fourth-Quarter-and-Year-End-Results\/\"><i>Signature<\/i><\/a><i>; <\/i><a href=\"https:\/\/vidarresearch.substack.com\/p\/sbny-q422-reading-desperation\"><i>Vidar Research<\/i><\/a>]<\/p>\n<p>Sig\u00adna\u00adture tapped its lo\u00adcal home-loan bank for nearly $10 bil\u00adlion in the fourth quar\u00adter \u2014 among the largest such bor\u00adrow\u00adings by any bank since early 2020. [<a href=\"https:\/\/www.wsj.com\/amp\/articles\/crypto-banks-borrow-billions-from-home-loan-banks-to-plug-shortfalls-11674263424\"><i>WSJ<\/i><\/a><i>, paywalled<\/i>]<\/p>\n<p>Signature was also banking Binance through Seychelles shell company Key Vision Development. Key Vision was struck off the corporate register in the Seychelles over a year ago, and Binance continued to bank using their name. [<a href=\"https:\/\/medium.com\/@ExkrementKoin\/is-signature-bank-still-banking-binance-com-e22b534ba983\"><i>Twitter<\/i><\/a>]<\/p>\n<p>Dirty Bubble got hold of the 2021 client list for <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/01\/12\/crypto-collapse-dcgs-check-kiting-comes-home-to-roost-nexo-raided-voyager-sale-to-binance-progresses-unbanking-the-banked\/\">Signet<\/a>, the internal exchange network run by Signature Bank. [<a href=\"https:\/\/dirtybubblemedia.substack.com\/p\/a-walled-garden-full-of-snakes-the?sd=pf\"><i>Dirty Bubble<\/i><\/a>]<\/p>\n<h3>By the way, is there anyone on board who knows how to fly a plane?<\/h3>\n<p>Sam Bankman-Fried of FTX used to say on the Silvergate Bank website: \u201cLife as a crypto firm can be divided up into before Silvergate and after Silvergate. It\u2019s hard to overstate how much it revolutionized banking for blockchain companies.\u201d The testimonial has since been deleted.<\/p>\n<p>Silvergate CEO Alan Lane described the <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2021\/05\/14\/facebooks-diem-stablecoin-moves-to-the-us-and-hooks-up-with-silvergate-bank\/\">Silvergate Exchange Network<\/a> (SEN) in 2021 as \u201cnot like it\u2019s an approved product. It\u2019s a non-disapproved product.\u201d Yeah, regulators are really into those.<\/p>\n<p>By the way \u2014 SecondMarket, the company that became Genesis, was Silvergate\u2019s first crypto customer. [<a href=\"https:\/\/nymag.com\/intelligencer\/2023\/01\/silvergate-crypto-industrys-favorite-bank-in-deep-trouble.html\"><i>Intelligencer<\/i><\/a>]<\/p>\n<p>Silvergate&#8217;s co-founder and Chief Credit Officer Derek Eisele just jumped ship. [<a href=\"https:\/\/twitter.com\/AureliusValue\/status\/1614715600139436035\"><i>Twitter<\/i><\/a>]<\/p>\n<h3>Friends of FTX<\/h3>\n<p>Shortly before FTX folded, it sent $400 million to Modulo Capital \u2014 a hitherto unknown crypto &#8220;hedge fund&#8221; with no history,and no profile. It was one of Sam Bankman-Fried\u2019s largest investments. [<a href=\"https:\/\/www.nytimes.com\/2023\/01\/24\/business\/ftx-sbf-modulo-capital.html\"><i>NYT<\/i><\/a>]<\/p>\n<p>Modulo operated out of the compound in the Bahamas where Sam and the FTX inner circle lived. Modulo founders Duncan Rheingans-Yoo and Xiaoyun \u201cLily\u201d Zhang were colleagues of former FTX US head Brett Harrison at Jane Street. SBF and Zhang apparently used to be a couple.<\/p>\n<p>Molly White annotated SBF\u2019s second mycrimes.blog, so nobody else has to. Sam makes clearly false statements from the beginning, and any true statement is probably an accident. [<a href=\"https:\/\/www.mollywhite.net\/annotations\/sbf-ftx-pre-mortem-overview\"><i>Molly White<\/i>]<\/a><\/p>\n<h3>Nexo<\/h3>\n<p>CeFi crypto \u201clender\u201d Nexo has agreed to pay the US Securities and Exchange Commission $45 million in penalties and cease the offering of its unregistered crypto lending product. [<a href=\"https:\/\/www.sec.gov\/litigation\/admin\/2023\/33-11149.pdf\"><i>Order<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>Nexo\u2019s Sofia office was <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/01\/12\/crypto-collapse-dcgs-check-kiting-comes-home-to-roost-nexo-raided-voyager-sale-to-binance-progresses-unbanking-the-banked\/\">raided earlier this month<\/a> and the Bulgarian government <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/01\/15\/crypto-collapse-bitcoin-goes-up-nexo-charged-gbtc-still-wants-to-be-an-etf-crypto-exchanges-struggle-ftx-voyager\/\">charged them with money laundering<\/a>. Nexo says the actions were politically motivated \u2014 and not a coordinated international police action \u2014 so they will be suing Bulgaria for ONE BEELION DOLLARS. [<a href=\"https:\/\/m.novinite.com\/articles\/218537\/Nexo+will+Sue+Bulgaria+for+1%2C000%2C000%2C000+Dollars\"><i>Novinite<\/i><\/a>]<\/p>\n<p>Withdrawals from Nexo appear finally to have stopped. [<a href=\"https:\/\/www.reddit.com\/r\/Buttcoin\/comments\/10i1va8\/nexo_users_love_the_platforms_forced_hodl\/\"><i>Reddit<\/i><\/a>]<\/p>\n<h3>Everybody hates Avi Eisenberg<\/h3>\n<p>The CFTC has put in its complaint against <a href=\"https:\/\/amycastor.com\/2023\/01\/08\/crypto-collapse-dcgs-problem-is-grayscale-ftx-bahamas-agreement-defi-trading-arrest-silvergate-bank-huobi-binance\/\">Avi Eisenberg<\/a>, the hotshot DeFi trader who bragged on Twitter about wrecking Mango Markets and was arrested on Dec 27 and refused bail. [<a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.nysd.592057\/gov.uscourts.nysd.592057.1.0_1.pdf\"><i>Complaint<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>The charges are use of a manipulative or deceptive device and manipulation of a swap. CFTC asks that Eisenberg be permanently enjoined from trading commodities \u2014 which presumably includes this variety of crypto assets.<\/p>\n<p>The interesting part is that this complaint is phrased just like a perfectly ordinary commodities trading violation. Even the meat of the demanded penalty is a lifetime ban from trading.<\/p>\n<p>We expect this to be a template for future CFTC actions against DeFi traders.<\/p>\n<p>The SEC has also charged Eisenberg with manipulation of Mango\u2019s governance token, which they assert is a security. And it probably is. [<a href=\"https:\/\/www.sec.gov\/news\/press-release\/2023-13\"><i>Press release<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.sec.gov\/litigation\/complaints\/2023\/comp-pr2023-13.pdf\"><i>complaint<\/i><\/a>]<\/p>\n<h3>Cooking the planet for no fun and no profit<\/h3>\n<p>Bitcoin mining has been pushed out of Kazakhstan. There\u2019s lots of abandoned equipment and facilities. [<a href=\"https:\/\/www.technologyreview.com\/2023\/01\/12\/1066589\/bitcoin-mining-boom-kazakhstan\/\"><i>MIT Technology Review<\/i><\/a>]<\/p>\n<p>Galaxy Digital has acquired the Helios mining operation from Argo Blockchain, which has let Argo avoid bankruptcy. In mainframe computing, this was called &#8220;mating dinosaurs.&#8221; In banking, it\u2019s \u201ctwo drunks propping each other up.\u201d In crypto, it&#8217;s &#8220;finding a bigger shell to keep hiding the pea-word.&#8221; [<a href=\"https:\/\/www.newswire.ca\/news-releases\/galaxy-to-acquire-helios-bitcoin-mining-facility-from-argo-blockchain-864890876.html\"><i>press release<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.coindesk.com\/business\/2022\/12\/28\/bitcoin-miner-argo-will-avoid-bankruptcy-with-100m-bailout-from-novogratzs-galaxy\/\"><i>CoinDesk<\/i><\/a>]<\/p>\n<p>BlockFi is selling off its loans backed by mining rigs. [<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2023-01-23\/bankrupt-lender-blockfi-to-sell-bitcoin-mining-backed-loans\"><i>Bloomberg<\/i><\/a>]<\/p>\n<h3>Other happy news<\/h3>\n<p>The SEC has been giving crypto firms who want to go public a hard time. Good. This is why Circle abandoned its SPAC plans. [<a href=\"https:\/\/www.wsj.com\/articles\/sec-scrutiny-blocks-some-crypto-firms-from-going-public-11674527071\"><i>WSJ<\/i><\/a><i>, paywalled<\/i>]<\/p>\n<p>Phishing attempts have been made on Celsius customers. [<a href=\"https:\/\/cases.stretto.com\/public\/x191\/11749\/PLEADINGS\/1174901232380000000003.pdf\"><i>Doc 1904<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>Aw, darn it! Celsius CEO Alex Mashinsky\u2019s magnum opus <i>The Mashinsky Method<\/i> is no longer being published, even if it is still listed on Amazon UK as coming out in June. Your mission: find and leak this text. Direct to LibGen. [<a href=\"https:\/\/twitter.com\/WileyGlobal\/status\/1595466594402144256\"><i>Twitter<\/i><\/a>; <a href=\"https:\/\/www.amazon.co.uk\/Mashinsky-Method-Yourself-Financial-Freedom\/dp\/1119863600\"><i>Amazon<\/i><\/a>]<\/p>\n<p>Patrick McKenzie explains how Know-Your-Customer laws actually work \u2014 and why. Patrick has now left Stripe, and you can subscribe to his excellent blog explaining payment system nuts and bolts.\u00a0 [<a href=\"https:\/\/www.bitsaboutmoney.com\/archive\/kyc-and-aml-beyond-the-acronyms\/?ref=bits-about-money-newsletter\"><i>Bits About Money<\/i><\/a>]<\/p>\n<p>Crypto.com suddenly had to migrate EUR payment providers at very short notice. We\u2019re sure everything is <i>fine<\/i>. [<a href=\"https:\/\/twitter.com\/Cryptadamist\/status\/1617072124442841089\"><i>Twitter<\/i><\/a>]<\/p>\n<p>Coinbase has left Japan \u201cdue to volatile market conditions.\u201d [<a href=\"https:\/\/www.coinbase.com\/blog\/halting-operations-in-japan\"><i>blog post<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.reuters.com\/article\/idUSL4N34321F\"><i>Reuters<\/i><\/a>]<\/p>\n<p>Dirty Bubble \u2014 <i>a.k.a.<\/i> Mike Burgersburg, or his real name, James Block \u2014 goes on Laura Shin\u2019s Unchained. This is a great interview and you should watch it. 64 minutes. [<a href=\"https:\/\/www.youtube.com\/watch?v=vh1-KPjSIM4\"><i>Youtube<\/i><\/a>]<\/p>\n<br><br><div align=\"center\"><p><a href=\"https:\/\/www.patreon.com\/bePatron?u=8420236\"><img src=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2021\/10\/become_a_patron_button.svg\" alt=\"Become a Patron!\" title=\"Become a Patron!\" width=217 height=51><\/a><br><p style=\"align:center;\" class=\"patreon-badge\"><i>Your subscriptions keep this site going. <a href=\"https:\/\/www.patreon.com\/bePatron?u=8420236\">Sign up today!<\/a><\/i><\/p><\/div>","protected":false},"excerpt":{"rendered":"<p>I will gladly pay you GBTC on Tuesday for a hamburger today.<\/p>\n","protected":false},"author":1,"featured_media":24617,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[3016,1527,3324,2493,3405,3414,3370,568,1795,988,916,167,650,3396,288,1853,2031,3400,3410,3035,3401,3411,580,1105,3093,652,2890,1799,9,412,2529,3408,2671,3412,3413,3403,3397,3402,1717,3409,3407,2520,407,3398,3404,3394,234,2491,3395,33,3388,1545,3399,3406],"class_list":["post-24616","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorised","tag-3ac","tag-advcash","tag-alan-lane","tag-alex-mashinsky","tag-alexander-vasilev","tag-argo-blockchain","tag-avi-eisenberg","tag-binance","tag-blockfi","tag-bulgaria","tag-celsius","tag-cftc","tag-circle","tag-cleary-gottlieb","tag-coinbase","tag-crypto-com","tag-dcg","tag-derar-islim","tag-derek-eisele","tag-dirty-bubble-media","tag-donut","tag-duncan-rheingans-yoo","tag-frances-coppola","tag-galaxy-digital","tag-gbtc","tag-gemini","tag-genesis","tag-grayscale","tag-ico","tag-japan","tag-kazakhstan","tag-key-vision-development","tag-laura-shin","tag-lily-zhang","tag-mango","tag-mercuryo","tag-michael-moro","tag-michael-sonnenshein","tag-mining","tag-modulo","tag-native-video-box","tag-nexo","tag-patrick-mckenzie","tag-paul-aronzon","tag-peter-kozyakov","tag-ram-ahluwalia","tag-roger-ver","tag-sam-bankman-fried","tag-sean-oneal","tag-sec","tag-signature-bank","tag-silvergate-bank","tag-thomas-conheeney","tag-yaacov-bitton"],"jetpack_featured_media_url":"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/01\/europe_boardman_robinson.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/24616","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/comments?post=24616"}],"version-history":[{"count":43,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/24616\/revisions"}],"predecessor-version":[{"id":24660,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/24616\/revisions\/24660"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media\/24617"}],"wp:attachment":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media?parent=24616"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/categories?post=24616"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/tags?post=24616"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}