Below is the latest crypto news regarding the defunct FTX exchange, of former CEO Sam Bankman-Fried, which collapsed in November 2022. It is worth recalling that FTX’s situation had become untenable after a liquidity crisis due to the withdrawal of billions of funds from customers.
Behind the scenes, in fact, the exchange platform allegedly began using billions of dollars from customers to finance risky operations of Alameda Research, the digital currency company founded by Bankman-Fried himself.
Crypto news: FTX and Alameda seek redemption for shareholders
The FTX and Alameda debacle has been continuing for four months now, following the entities’ filing for Chapter 11 bankruptcy protection.
FTX, under current CEO John J. Ray III, has been trying to recover as many assets as possible to repay distressed creditors.
Recently, FTX and Alameda sued asset manager Grayscale Investments in an effort to recover more value for creditors.
Specifically, the two entities alleged that Grayscale was prohibiting shareholders of Grayscale’s Bitcoin and Ethereum Trusts from redeeming their shares and charging exorbitant management fees, which they claimed suppressed the value of the shares.
FTX officials say the move could unlock $9 billion or more in value for shareholders and realize over a quarter of a billion dollars in asset value for FTX’s customers and creditors. In addition, the two companies have also communicated with politicians that they have received investor money from SBF to return the funds.
Meanwhile, FTX Japan investors have already started receiving their refunds after the subsidiary reopened its services. According to on-chain analytics firm Lookonchain, addresses related to FTX and Alameda have transferred more than $140 million in the past 24 hours.
In particular, Lookonchain noted that more than 43 million USDT has been transferred to Coinbase Global, Binance, and Kraken. The move may be preparatory to the impending liquidation of assets.
In addition, the analyst firm identified over $75 million in USDC, which FTX and Alameda transferred to a Coinbase custody portfolio. The two entities are still short billions in their balance sheet, so the current CEO indicated in a congressional hearing how much some crypto wallets are still missing and entangled in the blockchain.
As a result, he noted that more time is required to fix things before creditors can start receiving funds.
Banks competing for the crypto business: former FTX executive speaks out
New banks will compete for the business of cryptocurrency companies after the demise of Silvergate and Signature Bank, said former FTX president Brett Harrison.
Harrison, in an episode of The Scoop podcast due out Wednesday, said the following:
“Previously those banks couldn’t really compete with the top two or three – Silvergate and Signature among them – because they had such a large percentage of the market share.”
Cryptocurrency companies were left struggling to find new banking partners after these two companies stopped serving the industry. Some are turning to institutions such as Mercury, Brex and Customers Bank, and others are looking to non-US players such as Sygnum and Seba Bank, The Block reported.
Harrison also believes that recent developments will further support the push into derivatives.
Indeed, the former FTX executive stated:
“It has been a long time since the main source of volume in cryptocurrencies is in derivatives, not the underlying point.”
While building his new venture, Architect, which closed a $5 million funding round in January and expects to launch its first product in a month, Harrison said finding a bank was not difficult because he had an existing relationship with a major bank systemic, remarking:
“Many people were badly affected over the weekend. I mean, a lot of people have had heart attacks wondering if they were going to make payroll this week.”
Harrison pointed out that cryptocurrency futures on the CME reached new highs in January, and this is mainly the result of people losing confidence in spot exchanges, he argues.
Moving forward, he sees the potential development of new exchanges that would reduce the need for instant banking “rails” by having arrangements similar to what is happening in the stock world.
Focus on Vanguard Group following SVB’s collapse
Vanguard Group Inc plans to close its wholly owned investment management unit based in Shanghai and exit an investment advisory joint venture with Ant Group, the website Caixin reported Wednesday, citing several unnamed sources.
The group did not respond directly to requests for comment on the report, but an e-mailed statement from Vanguard Investment Management said the two Shanghai-based businesses are operating normally.
Vanguard, one of the world’s largest asset managers, based in Pennsylvania, had abandoned plans to license mutual funds in China in 2021, citing a “crowded” market.
In addition, Vanguard Group funds have reportedly lost more than $3 billion due to the failures of SVB and Signature Bank, with major repercussions for the market.
Experts believe there is a good chance that Vanguard Group funds will recover only a few cents on the dollar, or nothing at all, from their investments in SVB and Signature.