Despite price recovery: crypto industry remains in the FTX low
Dhe crypto exchange FTX’s scandalous collapse last year shook the crypto world, affecting many investors and businesses. Some celebrities, such as the star quarterback, are among the victims Tom Brady, who owns more than 1 million shares of FTX Trading, or Brady’s former wife, the model Gisele Bundchen, who owns more than 680,000 of those shares. This is reported by the Bloomberg news agency, citing court documents. FTX Trading was valued at around $32 billion a year ago and is practically worthless today.
Crypto assets are in vogue again this year. The MVIS CryptoCompare Digital Assets 10 index has risen by 10 percent so far. But the shocks can still be felt in the crypto industry. For example, the accounts of customers who have money in the “Earn” savings program of the Gemini company, set up by the Facebook co-founders, the Winklevoss twins, have been frozen for two months. Around 900 million dollars in customer funds are stuck. Gemini had passed on the money, for which there was a lavish interest rate of up to 8 percent, to the crypto lender Genesis Global in order to do business with it. Then when he froze the accounts, Gemini was forced to do the same.
Since then, the Winklevoss brothers have been in a mud fight with Genesis owner Barry Silbert. On Tuesday, they called for his dismissal, accusing him of defrauding Gemini-Earn customers. Silbert or his company Digital Currency Group called the Winklevoss brothers’ request another desperate and unconstructive PR measure intended to distract from their own fault.
But there is criticism of the Winklevoss brothers. About two years ago, Gemini employees say they have been pushing to find more partners besides Genesis, but they probably couldn’t be found – especially since the bankruptcies of the distributors Celsius and Voyager and the imbalance of BlockFi, in which the Winklevoss had invested, the situation had deteriorated dramatically.
As a result, the brothers are said to have decided to hire Earn. But the FTX bankruptcy then brought the whole program into the current imbalance, especially since Genesis had already gotten itself into trouble with risky loans to the crypto hedge fund Three Arrows, which has also since gone bankrupt.
Earn is now officially discontinued after Gemini canceled agreements with Genesis and was supposed to return all assets. But while the customers are waiting for their money, the Winklevoss are not in trouble. Her personal fortune is estimated by Bloomberg at $6 billion. And despite the problems with Earn, Gemini is not facing bankruptcy, despite losing customers and making layoffs in June.
Miners with debt problems
Layoffs are currently common in the once booming industry. On Tuesday, the largest American crypto exchange announced Coinbase further extensive layoffs, on Wednesday it was announced that Coinbase will largely withdraw from Japan – despite the upcoming easing of regulations there.
Bitcoin mining does not seem to be a cash cow either. The largest miner, Core Scientific, became the first major to file for bankruptcy in December, citing falling prices and higher energy costs as the reason. Many others seek debt relief. Investments in mining infrastructure fell 77 percent in the third quarter of last year. Because some miners have reserves in Bitcoin hold, the urge to reduce debt puts pressure on prices.
Only the Binance exchange, whose boss Changpeng Zhao played a somewhat opaque role in the FTX bankruptcy, is optimistic – despite recent reports of high outflows of money. It is said that they want to secure a license in Japan and are now probably in possession of the assets of the insolvent lender Voyager, which were originally supposed to go to FTX. Voyager still has around 1.2 million customers and around $1 billion in assets, which Binance is now expected to pay $20 million for.
Meanwhile, another member of the inner circle around former CEO Sam Bankman-Fried seems to be breaking away from former FTX chief engineer Nishad Singh. He is said to have met with the prosecutor in New York. While Bankman-Fried has pleaded not guilty, co-founder Gary Wang and former CEO of FTX hedge fund Alameda Caroline Ellison have pleaded guilty to fraud. Singh could shed light on FTX’s fundraising campaigns for the Democratic Party, which new management now wants back, they say.