{"id":24822,"date":"2023-02-12T19:34:23","date_gmt":"2023-02-12T19:34:23","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=24822"},"modified":"2023-02-13T00:32:03","modified_gmt":"2023-02-13T00:32:03","slug":"crypto-collapse-unbanking-crypto-genesis-offers-dcg-shares-to-creditors-binance-suspends-us-dollar-transactions-sec-goes-after-staking","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2023\/02\/12\/crypto-collapse-unbanking-crypto-genesis-offers-dcg-shares-to-creditors-binance-suspends-us-dollar-transactions-sec-goes-after-staking\/","title":{"rendered":"Crypto collapse: Unbanking crypto, Genesis offers DCG shares to creditors, Binance suspends US dollar transactions, SEC goes after staking"},"content":{"rendered":"<p><i>By <\/i><b><i>Amy Castor<\/i><\/b><i> and <\/i><b><i>David Gerard<\/i><\/b><i><\/i><\/p>\n<ul>\n<li aria-level=\"1\">We still have banking, so you can send money to our Patreons \u2014 here\u2019s<a href=\"https:\/\/www.patreon.com\/amycastor\"> Amy\u2019s<\/a>, and here\u2019s<a href=\"https:\/\/www.patreon.com\/davidgerard\/\"> 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. International posting from the UK is still a bit delayed after the Royal Mail got ransomwared. [<a href=\"https:\/\/www.bbc.co.uk\/news\/business-64324000\"><i>BBC<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.royalmail.com\/international-incident-bulletin\"><i>Royal Mail<\/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>We expect Nocoin to moon any time now. In fact, we both have most of our net worth tied up in Nocoin, with a small portion in Nocoin Cash. Hard to believe it&#8217;s still so undervalued. Once everyone sees how awesome Nocoin is, they&#8217;ll flood in and the price will skyrocket. It&#8217;s inevitable.<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/02\/12\/crypto-collapse-unbanking-crypto-genesis-offers-dcg-shares-to-creditors-binance-suspends-us-dollar-transactions-sec-goes-after-staking\/dead-piggy-bank\/\" rel=\"attachment wp-att-24823\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-24823\" src=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/dead-piggy-bank.jpg\" alt=\"\" width=\"340\" height=\"210\" srcset=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/dead-piggy-bank.jpg 680w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/dead-piggy-bank-300x185.jpg 300w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/dead-piggy-bank-348x215.jpg 348w\" sizes=\"auto, (max-width: 340px) 100vw, 340px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<h3>Unbanking the banked: 1 BTC = 0 USD<\/h3>\n<p>In late January, the Federal Reserve, the FDIC, and the OCC <a href=\"https:\/\/amycastor.com\/2023\/02\/05\/crypto-collapse-crypto-coms-shadow-bank-transactive-us-banks-and-crypto-binance-not-so-good-with-actual-money\/\">sent a message to state banks<\/a> to back off their crypto involvement. On February 7, that policy statement was entered into the Federal Register, turning it into a final rule. [<a href=\"https:\/\/www.federalregister.gov\/documents\/2023\/02\/07\/2023-02192\/policy-statement-on-section-913-of-the-federal-reserve-act\"><i>Federal Register<\/i><\/a>]<\/p>\n<p>On January 30, three US Senators \u2014 Elizabeth Warren (D-MA), Roger Marshall (R-KS), and John Kennedy (R-LA) \u2014 sent an open letter to Silvergate Bank CEO Allen Lane demanding a better explanation of the bank\u2019s role in the FTX debacle than the previous evasions Lane had given them. [<a href=\"https:\/\/www.warren.senate.gov\/imo\/media\/doc\/2023.01.30%20Follow-up%20Letter%20to%20Silvergate%20Bank%20re%20Crypto%20Exposure%20and%20FTX%20Impropriety1.pdf\"><i>Warren<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>Silvergate was FTX and Alameda\u2019s main actual-dollar bank. When FTX was falling apart in late 2022, Silvergate\u2019s other crypto customers took out their money in a panic, and the bank lost $8.1 billion in deposits. They weren\u2019t insolvent, they had loans to cover those deposits \u2014 <i>e.g.,<\/i> to MicroStrategy \u2014 but didn&#8217;t have cash-on-hand liquidity. So they got a $4.3 billion bailout from the Federal Home Loan Bank.<\/p>\n<p>This is the contagion the US government has been worried about \u2014 where the government becomes the bagholder of last resort. And they\u2019re not having any of it. So banks \u2014\u00a0even previously crypto-friendly banks like Signature and Metropolitan \u2014 have been warned, and\u00a0they\u2019re dumping their crypto customers as fast as they can.<\/p>\n<p>The crypto world is convinced this is the US government conspiring against them. If the government getting deeply pissed off at having to bail out crypto bozos is a conspiracy, then sure.<\/p>\n<p>Bitcoin finance guru (<i>cough<\/i>) Nic Carter has an apocalyptic write-up of the unbanking disaster. His post is surprisingly reality-based \u2014 but with a few hilariously crazy bits. He tries to paint what\u2019s going on as a massive evil conspiracy, rather than everyone finally having had it with crypto\u2019s nonsense. Good thing crypto is uncensorable and unstoppable and doesn\u2019t need banking. [<a href=\"https:\/\/www.piratewires.com\/p\/crypto-choke-point\"><i>Pirate Wires<\/i><\/a>, <a href=\"https:\/\/archive.is\/9TH1A\"><i>archive<\/i><\/a>]<\/p>\n<p>AP_Abacus, a coiner whose record on rumors is not perfect but is pretty good, says venture capitalists \u201care starting to become very, very concerned that their crypto portfolio companies are being de-banked en masse.\u201d [<a href=\"https:\/\/twitter.com\/AP_Abacus\/status\/1623346565589962752\"><i>Twitter<\/i><\/a>]<\/p>\n<p>Fortune has written up the OCC\u2019s misadventures in crypto banking under previous head Brian Brooks, and how Brooks\u2019 successor Michael Hsu is winding back Brooks\u2019 nonsense. [<a href=\"https:\/\/fortune.com\/crypto\/2023\/02\/08\/with-crypto-banking-on-the-brink-rumors-are-flying\/\"><i>Fortune<\/i><\/a><i>; House, PDF, <\/i><a href=\"https:\/\/web.archive.org\/web\/20210519090424\/https:\/\/financialservices.house.gov\/uploadedfiles\/hhrg-117-ba00-wstate-hsum-20210519.pdf\"><i>archive<\/i><\/a>]<\/p>\n<p>Fed Governor Christopher J. Waller has a few thoughts on crypto. \u201cIf you buy crypto-assets and the price goes to zero at some point, please don&#8217;t be surprised and don&#8217;t expect taxpayers to socialize your losses.\u201d [<a href=\"https:\/\/www.federalreserve.gov\/newsevents\/speech\/waller20230210a.htm\"><i>Federal Reserve<\/i><\/a>]<\/p>\n<h3>Genesis: an IOU for future magic beans<\/h3>\n<p>Genesis filed the term sheet for its restructuring proposal. The plan, originally announced on February 6, was put together by Genesis, their parent company Digital Currency Group, and the two ad-hoc creditor groups. [<a href=\"https:\/\/restructuring.ra.kroll.com\/genesis\/ExternalCall-DownloadPDF?id1=MTQ0MzE3Mw==&amp;id2=0&amp;cid=0\"><i>Doc 80<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/www.businesswire.com\/news\/altii\/20230206005640\/en\/Genesis-Reaches-Agreement-in-Principle-with-DCG-and-Key-Creditors-on-a-Global-Resolution-that-Optimizes-Outcome-for-Clients-and-Stakeholders\"><i>press release<\/i><\/a>]<\/p>\n<p>The term sheet is stultifying. Your eyes will slide off it. That\u2019s by design. It\u2019s a scheme to pay creditors with an IOU for nothing, valued at something, and it\u2019s written to obfuscate that.<\/p>\n<p>Genesis had a massive hole blown in its accounts by Three Arrows Capital collapsing. DCG wrote Genesis a promissory note for $1.1 billion \u2014 payable over ten years at a 1% interest rate \u2014 so that Genesis could account for it as $1.1 billion of assets. A kited check that\u2019s good as long as it\u2019s never cashed.<\/p>\n<p>The meat of this new deal is to take that $1.1 billion loan and turn it into shares in DCG, to be distributed to creditors along with some existing DCG equity. Gemini Earn creditors can take partial cash reimbursement if they don\u2019t join the bail-in.<\/p>\n<p>DCG&#8217;s existing obligations will be converted into new subordinated loans and preference shares. The shares in DCG that they\u2019re promising to creditors don\u2019t even exist yet. DCG will have to do an IPO by February 2025.<\/p>\n<p>How much of a haircut do creditors take? No haircut at all! &#8230; <i>if<\/i> you think it\u2019s worth your missing money to accept DCG\u2019s left hand offering you equity in its loan to DCG\u2019s right hand.<\/p>\n<p>Always remember that Genesis is 100% a part of DCG \u2014 and DCG\u2019s goal is to get out of Genesis\u2019 bankruptcy unscathed, with nobody coming after them for the hole in their subsidiary\u2019s accounts.<\/p>\n<p>To this end, DCG is trying to pay off Genesis creditors with a currently-worthless share in a debt that was paper-shuffling in the first place, and will only be worth anything if and when bitcoin bubbles again.<\/p>\n<p>This reminds us of <a href=\"https:\/\/amycastor.com\/2019\/01\/17\/the-curious-case-of-tether-a-complete-timeline-of-events\/\">the deal Bitfinex proposed to its users<\/a> after it was <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2022\/02\/12\/could-morgan-and-lichtenstein-have-done-the-2016-bitfinex-hack-im-not-ruling-it-out\/\">hacked in August 2016.<\/a> That hack left Bitfinex functionally insolvent, so it offered users equity tokens in the company instead of their money. Bitfinex did eventually pay back all the customers\u2019 money! In tethers, anyway. Crypto has always been about creating \u201cmoney\u201d out of thin air.<\/p>\n<p>Given Genesis has been broke since July and bitcoin isn\u2019t bubbling again any time soon, it\u2019s possible that this deal is about as good as creditors can get \u2014 if they can\u2019t somehow claw their money straight back from DCG. Also, any bankruptcy plan has to be approved by the court and voted on by all creditors.<\/p>\n<h3>It\u2019s low tide, and Binance is butt-naked<\/h3>\n<p>The tide has gone out on crypto \u2014\u00a0retailers have taken their actual cash and gone home. Banks want nothing to do with offshore crypto exchanges and dubious crypto hedge funds. The remaining firms are standing butt-naked, covered only with a transparent gauze of their own internal tokens.<\/p>\n<p>Binance suspended all US dollar bank transfers February 8. Apparently, this only affects Binance.com, not Binance US. Users cannot deposit or withdraw USD. [<a href=\"https:\/\/www.coindesk.com\/business\/2023\/02\/06\/crypto-exchange-binance-to-suspend-us-dollar-deposits-this-week\/\"><i>Coindesk<\/i><\/a>]<\/p>\n<p>Bitfinexed thinks the USD being stuck at Binance is why the price of bitcoin has gone from $16,000 a few weeks ago to over $20,000. Bitcoin trading is that thin, and the bitcoin price is pretty much set at Binance. When you can\u2019t get cash off an exchange, you trade whatever you\u2019ve got for bitcoin, so you can move it to Coinbase and cash out. The demand pushes up the price.<\/p>\n<p>We saw the same thing happen at Bitfinex in 2017 after they lost their banking. People used their trapped dollars to buy bitcoins, sending the price up. This helped kick-start the 2017 bitcoin bubble. Prolific tether printing kicked off soon after. [<a href=\"https:\/\/twitter.com\/Bitfinexed\/status\/1622641595253129229\"><i>Twitter<\/i><\/a>]<\/p>\n<p>Tether now accounts for a greater share of stablecoin value on Binance than Binance&#8217;s own stablecoin, Binance USD \u2014 if you accept tethers are worth a dollar. [<a href=\"https:\/\/twitter.com\/jp_koning\/status\/1622707498082877440\"><i>Twitter<\/i><\/a>]<\/p>\n<p>Binance has hundreds of coins, and most have a trading pair against both USDT and BUSD. The tether version of a trading pair tends to trade as if tethers are worth just a little bit less than BUSD. [<a href=\"https:\/\/www.coingecko.com\/en\/exchanges\/binance\"><i>CoinGecko<\/i><\/a>]<\/p>\n<p>You can\u2019t cash out with tethers because tethers aren\u2019t redeemable. But Binance BUSD is often worth a dollar, and <i>mostly<\/i> matches the Paxos BUSD that it&#8217;s <a href=\"https:\/\/amycastor.com\/2022\/12\/01\/crypto-collapse-blockfi-even-deader-crypto-miners-going-broke-sam-will-not-shut-up-binance-and-tether-are-fine\/\">bridged from.<\/a><\/p>\n<p>Binance is only solvent if you count its supermarket loyalty card points (BNB) as money. FTX worked the same way, only their supermarket points were FTT.<\/p>\n<h3>The SEC puts a stake through your heart<\/h3>\n<p>The SEC is coming down hard on crypto\u2019s rampant securities law violations. SEC Chair Gary Gensler told Squawkbox\u2019s Andrew Ross Sorkin that it\u2019s time for crypto firms to comply with securities laws and make the proper disclosures. \u201cThe runway is getting awfully short, and we are here to try to protect the investing public.\u201d [<a href=\"https:\/\/www.youtube.com\/watch?v=bqBdYqpGm1c\"><i>YouTube<\/i><\/a>]<\/p>\n<p>Kraken settled SEC charges by agreeing to shut down its staking products, which offered up to 24% returns. Kraken is paying $30 million in disgorgement, prejudgment interest, and civil penalties. [<a href=\"https:\/\/www.sec.gov\/news\/press-release\/2023-2\"><i>SEC <\/i><em>press release<\/em><\/a><em>; <a href=\"https:\/\/www.sec.gov\/litigation\/complaints\/2023\/comp-pr2023-25.pdf\">complaint<\/a>, PDF<\/em>]<\/p>\n<p>Here\u2019s a video from Gary Gensler, for your daily quota of dad jokes about staking! [<a href=\"https:\/\/www.youtube.com\/watch?v=hmPpIjfC9DY\"><i>YouTube<\/i><\/a>]<\/p>\n<h3>Frances Coppola on Celsius<\/h3>\n<p>Frances Coppola published her deep dive on the <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/02\/01\/celsius-network-final-report-from-the-examiner-lies-incompetence-and-ponzi-schemes\/\">Celsius examiner\u2019s report,<\/a> combined with her close reading of Celsius\u2019 UK accounts up to December 31, 2020 \u2014 the last accounts that exist. It\u2019s a heck of a tale and worth a read. \u201cThe U.S. Examiner&#8217;s report reveals deep and long-lasting insolvency, concealed by layer on layer of fraud.\u201d [<a href=\"https:\/\/www.coppolacomment.com\/2023\/02\/the-fatal-flaws-of-celsius-network.html\"><i>Coppola Comment<\/i><\/a>]<\/p>\n<p>Celsius was never at any point a viable business, says Frances. It was a shadow bank that promised unfeasible returns \u2014 up to 18% yield on customer deposits. Even in the good times, Celsius couldn\u2019t manage to turn a profit.<\/p>\n<p>The heart of Celsius\u2019s operation was the &#8220;flywheel,\u201d a fraudulent perpetual motion scheme that involved Celsius buying and selling its own CEL tokens, the currency of its various frauds.<\/p>\n<p>Celsius used CEL tokens freely to pump up its balance sheet. Without it, \u201cCelsius would have failed in its first year of trading.\u201d The company was insolvent except for its own CEL magical money. Frances is pretty sure the accountants doing their audits realized Celsius was insolvent too, based on their disclaimers.<\/p>\n<p>Celsius spent May 2020 manipulating the price of CEL through buybacks. This is the market manipulation called \u201cpainting the tape,\u201d and it\u2019s illegal in both the UK and the US.<\/p>\n<p>Celsius could dump unlimited CEL on retail investors. But buying CEL to control the price required actual money and other tokens \u2014 relatively liquid crypto like USDC, bitcoin, and ether \u2014 that it couldn&#8217;t create. When it ran out of those, the game was over.<\/p>\n<p>Celsius and Mashinsky\u2019s personal corporation AMV loaned each other cryptos to buy the company\u2019s own share capital. \u201cLending to purchase own shares is illegal in most jurisdictions,\u201d says Frances. \u201cIt was a clever deception devised by someone well-versed in corporate finance and accounting. Celsius&#8217;s management knew this scheme was fraudulent.\u201d<\/p>\n<p>Coppola\u00a0 thinks Mashinsky wasn&#8217;t bright enough to come up with the schemes outlined by the examiner. Someone else would have come up with the schemes, and Mashinsky would have approved them. \u201cThis fraud was a team effort.\u201d<\/p>\n<p>The FCA issued a warning in June 2021 about crypto companies operating in the UK without a licence. Celsius in particular was warned that it could no longer market to retail customers in the UK.<\/p>\n<p>So Celsius set up in the US instead \u2014 but kept its UK entity going. The US company took deposits, and the UK company invested the funds. Celsius didn\u2019t distinguish between the entities \u2014 this was \u201cmerely an inconvenient device to evade the FCA.\u201d<\/p>\n<p>Would Celsius have survived if crypto hadn&#8217;t entered a bear market and if Terra-Luna hadn&#8217;t crashed? No, says Frances: \u201cIt would simply have taken longer to die, and lost even more of its customers&#8217; and investors&#8217; money.\u201d<\/p>\n<h3>Paxos<\/h3>\n<p>The New York Department of Financial Services is apparently sniffing around the Paxos stablecoin business. What they\u2019re after is not yet clear. [<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2023-02-10\/binance-s-stablecoin-partner-paxos-probed-by-new-york-regulator\"><i>Bloomberg<\/i><\/a>]<\/p>\n<p>PayPal was going to do a white-label Paxos stablecoin dollar \u2014 in the manner of BUSD \u2014 but \u201cis pausing work\u201d now that NYDFS is sniffing around Paxos. \u201cIf and when we seek to move forward, we will, of course, work closely with relevant regulators.\u201d Like Paxos, PayPal has a New York BitLicense. [<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2023-02-10\/paypal-pauses-stablecoin-work-amid-regulatory-scrutiny-of-crypto\"><i>Bloomberg<\/i><\/a>]<\/p>\n<p><strong>UPDATE: <\/strong><span data-offset-key=\"93k2j-0-0\">The SEC has sent Paxos a Wells Notice alleging BUSD is a security! More details next episode! [<a href=\"https:\/\/www.wsj.com\/amp\/articles\/crypto-firm-paxos-faces-sec-lawsuit-over-binance-usd-token-8031e7a7\"><em>WSJ<\/em><\/a>]<br \/>\n<\/span><\/p>\n<div data-contents=\"true\">\n<div class=\"\" data-block=\"true\" data-editor=\"59q1c\" data-offset-key=\"8sp0r-0-0\"><\/div>\n<\/div>\n<h3>FTX<\/h3>\n<p>The Financial Times has an amazing tale of the last days of FTX that you must read. \u201cIt felt like being at the collapse of Rome,\u201d said a person who attended one of the last gatherings at Sam Bankman-Fried\u2019s Bahamas penthouse. \u201cThe chocolate pudding topped with gold flakes seemed like something from a previous era.\u201d [<a href=\"https:\/\/www.ft.com\/content\/6e912f25-f1b7-4b19-b370-007fbc867246\"><i>FT<\/i><\/a><i>, <\/i><a href=\"https:\/\/archive.is\/Rthel\"><i>archive<\/i><\/a>]<\/p>\n<p>As expected, Bankman-Fried is appealing the judge\u2019s ruling to make the two additional sureties on his bail public. Who are these SBF supporters? [<a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.nysd.590940\/gov.uscourts.nysd.590940.64.0_2.pdf\"><i>Notice of Appeal<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>In an FTX bankruptcy hearing on February 6, Judge John Dorsey heard arguments for and against appointing an examiner. John Jay Ray III said the examiner report for Enron cost $90 million and wasn\u2019t even helpful. &#8220;When you review the reports, the reports are very topical, very general,\u201d he said. The Trustee hammered on the letter of the law, which says an examiner must be appointed in circumstances such as these. The judge told the parties, including lawyers for the Unsecured Creditors&#8217; Committee, to work out a \u201cconsensual resolution.\u201d<\/p>\n<p>FTX is sending notices to recipients of political donations to send the money back. Ray did <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2022\/12\/22\/ftx-sam-bankman-fried-out-on-bail-ellison-and-wang-cop-pleas\/\">tell them in December<\/a> that this was coming. [<a href=\"https:\/\/www.prnewswire.com\/news-releases\/ftx-debtors-send-messages-to-recipients-of-avoidable-donations-301738948.html\"><i>PRNewswire<\/i><\/a>]<\/p>\n<p>FTX also made political donations in Australia to the main two parties, via Alameda-owned HiveEx \u2014 AUD$27,540 in the 2021-2022 financial year. This was AUD$18,440 to the Liberal Party NSW, AUD$6,500 to the Australian Labor Party NSW, and AUD$2,400 to the ALP nationally. [<a href=\"https:\/\/protos.com\/scoop-australian-political-parties-received-donations-from-ftx\/\"><i>Protos<\/i><\/a>]<\/p>\n<p>Sullivan &amp; Cromwell, the law firm that Ray retained to represent FTX, billed $7.5 million for work in November, a period covering just 19 days. [<a href=\"https:\/\/restructuring.ra.kroll.com\/FTX\/Home-DownloadPDF?id1=MTQ0MjQ2NA==&amp;id2=-1\"><i>Doc 648<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/www.coindesk.com\/policy\/2023\/02\/08\/ftx-lawyers-sullivan-cromwell-bill-75m-for-first-19-days-bankruptcy-work\/?utm_source=twitter&amp;utm_campaign=coindesk_main&amp;utm_content=editorial&amp;utm_term=organic&amp;utm_medium=social\"><i>CoinDesk<\/i><\/a>]<\/p>\n<p>The Wall Street Journal speaks to FTX\u2019s in-house psychiatrist, George Lerner. \u201cDr. Lerner said one of his goals at FTX was helping employees go out on dates.\u201c [<a href=\"https:\/\/www.wsj.com\/articles\/how-sam-bankman-frieds-psychiatrist-became-a-key-player-at-crypto-exchange-ftx-11675605200\"><i>WSJ<\/i><\/a><i>, paywalled<\/i>]<\/p>\n<p>Patrick McKenzie talks in his payments blog about how anti-money laundering works. He goes into some detail about FTX, Alameda, and SBF\u2019s \u201ckimchi trade\u201d origin story \u2014 which we\u2019re pretty sure was mostly Sam lying, but anyway \u2014 and the point at which Alameda was technically money laundering: \u201cNo later than January 2018.\u201d Alameda also appears to have polished and shined billions of dollars for Bitfinex\/Tether. [<a href=\"https:\/\/www.bitsaboutmoney.com\/archive\/money-laundering-and-aml-compliance\/\"><i>Bits About Money<\/i><\/a>]<\/p>\n<h3>Getting stabbed in a parking lot, on the blockchain<\/h3>\n<p>The venerable peer-to-peer bitcoin exchanging service LocalBitcoins is closing down. They say it\u2019s because there\u2019s no money in the business anymore, and it\u2019s only coincidental that they were named as one of the largest channels for Bitzlato users. Trading stops on February 16. Users have a year to withdraw their bitcoins. [<a href=\"https:\/\/localbitcoins.com\/service_closure\"><i>Local Bitcoins<\/i><\/a><i>, <\/i><a href=\"https:\/\/archive.is\/1WY8i\"><i>archive<\/i><\/a><i>; <\/i><a href=\"https:\/\/cointelegraph.com\/news\/localbitcoins-closes-down-the-p2p-crypto-exchange-service\"><i>Cointelegraph<\/i><\/a>]<\/p>\n<p>Here is the greatest LocalBitcoins story ever told: the guy who swallowed the USB stick with his bitcoins on it because he saw a black person and panicked. [<a href=\"http:\/\/www.buttcoinfoundation.org\/the-greatest-buttcoin-story-ever-told\/\"><i>Buttcoin Foundation<\/i><\/a>]<\/p>\n<p>Crypto.com is now charging customers up to a mere 50% fee to withdraw. \u201cIf the tokens are worth \u00a3231, then why are they only worth \u00a3138 when I go to sell?\u201d [<a href=\"https:\/\/crypto.news\/%d1%81onsumers-complain-about-50-withdrawal-fees-on-crypto-com\/\"><i>Crypto.News<\/i><\/a>]<\/p>\n<p>Zhu Su and Kyle Davies of Three Arrows Capital \u2014 in liquidation \u2014 have unveiled OPNX, their new exchange for distressed crypto debt! Or they\u2019ve opened the waiting list, at least. &#8220;Our vision is unlocking trapped claims, radical transparency,&#8221; tweeted Zhu. [<a href=\"https:\/\/twitter.com\/zhusu\/status\/1623737538950184962\"><i>Twitter<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.theblock.co\/post\/210279\/su-zhu-unveils-new-opnx-exchange-for-trading-trapped-crypto-funds\"><i>The Block<\/i><\/a>]<\/p>\n<p>Meanwhile, Zhu and Davies are transparently not answering subpoenas from Teneo, 3AC\u2019s liquidators, in the US Chapter 15 part of the 3AC bankruptcy. [<a href=\"https:\/\/www.theblock.co\/post\/209552\/kyle-davies-has-chosen-to-ignore-his-duties-to-3ac-after-rare-twitter-subpoena\"><i>The Block<\/i><\/a>]<\/p>\n<p>The Bitzlato crypto exchange was <a href=\"https:\/\/amycastor.com\/2023\/01\/21\/crypto-collapse-genesis-bankrupt-coindesk-for-sale-bankman-fried-attacks-ftx-lawyers\/\">shut down by the US in January<\/a> for money laundering for the Hydra darknet market. Bitzlato cofounder Anton Shkurenko tells CoinDesk he could totally restart the exchange tomorrow \u2014 most of the users\u2019 funds are under the control of the exchange team. \u201cI could launch the exchange from my apartment. Two small servers are enough.\u201d Shkurenko was questioned by Russian police because he\u2019s on the Interpol wanted list, but he hasn\u2019t been charged with anything in Russia as yet. [<a href=\"https:\/\/www.coindesk.com\/consensus-magazine\/2023\/02\/10\/bitzlato-co-founder-released-after-arrest-in-moscow-pledges-relaunch-of-seized-exchange\/\"><i>CoinDesk<\/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>1 BTC = 0 USD.<\/p>\n","protected":false},"author":1,"featured_media":24823,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":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":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[3016,2653,2493,3436,3432,138,568,38,3393,1016,1898,3012,3063,916,2567,1853,2031,2500,3136,1515,580,1798,2060,652,2890,3434,3318,3315,3431,391,3051,596,3137,3433,594,1816,1829,3435,407,1903,860,3430,2491,33,3388,1545,3050,3319,3061,39,745],"class_list":["post-24822","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorised","tag-3ac","tag-alameda","tag-alex-mashinsky","tag-anton-shkurenko","tag-ap_abacus","tag-australia","tag-binance","tag-bitfinex","tag-bitzlato","tag-bnb","tag-brian-brooks","tag-busd","tag-cel","tag-celsius","tag-christopher-j-waller","tag-crypto-com","tag-dcg","tag-elizabeth-warren","tag-fdic","tag-federal-reserve","tag-frances-coppola","tag-ftx","tag-gary-gensler","tag-gemini","tag-genesis","tag-george-lerner","tag-john-dorsey","tag-john-jay-ray","tag-john-kennedy","tag-kraken","tag-kyle-davies","tag-localbitcoins","tag-metropolitan-commercial-bank","tag-michael-hsu","tag-new-york","tag-nic-carter","tag-occ","tag-opnx","tag-patrick-mckenzie","tag-paxos","tag-paypal","tag-roger-marshall","tag-sam-bankman-fried","tag-sec","tag-signature-bank","tag-silvergate-bank","tag-su-zhu","tag-sullivan-cromwell","tag-teneo","tag-tether","tag-united-states"],"jetpack_featured_media_url":"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/dead-piggy-bank.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/24822","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=24822"}],"version-history":[{"count":40,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/24822\/revisions"}],"predecessor-version":[{"id":24865,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/24822\/revisions\/24865"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media\/24823"}],"wp:attachment":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media?parent=24822"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/categories?post=24822"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/tags?post=24822"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}