Big companies spend tons of money tracking their financial transactions – think accountants, financial analysts, consultants, and business accounting software. Sam Bankman-Fried, on the other hand, used Microsoft Excel.
On January 17, in another botched Excel spreadsheet, SBF revealed that FTX US was solvent. The Excel file would have shown customer balances, bank deposits and assets kept in cold storage. “S&C forgot to include bank balances” of approximately $428 million, SBF said, referring to former FTX legal counsel Sullivan & Cromwell. “Once you add those in, you’re getting closer to my previous balance sheet” of about $350 million, he said.
This week’s Crypto Biz explores the “Herculean investigative effort” to identify billions in liquid FTX assets. We also give you the latest news on the ongoing saga of the Digital Currency Group.
FTX: It Took a “Herculean Investigative Effort” to Identify $5.5 Billion in Liquid Assets
SBF wasn’t the only one looking to uncover remaining FTX balances. Debtors of the bankrupt exchange identified $5.5 billion in liquid assets, including $1.7 billion in cash, $3.5 billion in crypto assets and around $300 million in securities. “We are making significant progress in our efforts to maximize recoveries, and it took a Herculean investigative effort by our team to uncover this preliminary information,” said FTX CEO John Ray. Before you get too excited, know that there is still a “substantial shortage of digital assets,” according to debtors at FTX. This means that FTX users shouldn’t expect to be reinstated anytime soon.
Sharing the FTX debtors press release just released: https://t.co/fcSs36nFmq
—FTX (@FTX_Official) January 17, 2023
Silvergate Reports Net Loss of $1 Billion in Q4 2022
The fallout from the crypto winter continues to ripple through the industry, with digital asset bank Silvergate reporting a massive net loss of $1 billion in the fourth quarter. In a report by the U.S. Securities and Exchange Commission, Silvergate disclosed $7.3 billion in customer deposits in the fourth quarter, down from about $12 billion in the third quarter. After hearing the news, ratings agency Moody’s Investors Service downgraded Silvergate’s rating from Baa2 to Ba1. It’s an unwanted status for those of you keeping track. Everything begins to understand why Silvergate laid off 40% of its staff in early January.
Despite the recently reported 70% drop in customer deposits of digital assets at Silvergate, NYDIG continues to support their business, adding deposits and continuing to use their SEN product.
— NYDIG (@NYDIG) January 18, 2023
Digital Currency Group stops dividends in an effort to preserve liquidity
The bad news about Digital Currency Group, or DCG, continues to mount after the capital market firm informed investors that it would be suspending quarterly dividend payments indefinitely. It’s no secret that DCG is facing liquidity constraints related to its subsidiary Genesis Global Trading. The issues surrounding Genesis were raised in public by Gemini co-founder Cameron Winklevoss, who wrote a letter to the DCG board accusing the company of orchestrating “a carefully crafted campaign of lies” to conceal the huge hole in Genesis’ balance sheet. When last checked, it was estimated that DCG owed its creditors over $3 billion.
Hong Kong investment fund raises $500 million to drive mass Web3 adoption
Months upon months of “downside only” in the crypto markets has left many of us jaded about the future of the industry. But behind the scenes, venture capital continues to pour millions into promising crypto-focused use cases. This week, Hong Kong investment manager HashKey Capital announced a $500 million fund to support the future of Web3 adoption. The new FinTech Investment Fund III will primarily invest in projects at the intersection of blockchain infrastructure, tools and applications that can leverage Web3 technology. “Web3 is growing too fast to ignore,” Xiao Xiao, chief investment officer of HashKey, told Cointelegraph. “Many traditional institutions and internet giants are interested in crypto. Some are learning to participate in this paradigm shift.
Before you go: Is Bitcoin in a bull run or a bull trap?
The price of Bitcoin (BTC) has risen more than 25% over the past week, marking its biggest seven-day rally in nearly two years. Naturally, investors wonder if the bear market is over. While there’s a good chance that Bitcoin has bottomed out, I wouldn’t be too excited about an extended bull rally just yet. In this week Market report, I sat down with my fellow analysts Marcel Pechman and Joe Hall to discuss BTC’s near-to-mid-term outlook. You can watch the full replay below.
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