Category Archives: cryptopotato.com

Sequoia Says Investment in FTX Does Not Negatively Impact its Fund

Major venture capital firm Sequoia Capital has written down the value of its investment in the beleaguered crypto exchange FTX, to zero.
Notably, the company was part of the investors who participated in FTX’s $900 million funding round in July 2021, which brought the exchange’s valuation to $18 billion at the time.
Sequoia Marks Down FTX Investment to $0
In a note to limited partners (LPs), which was revealed via Sequoia’s Twitter handle on Thursday (November 10, 2022), the venture capital firm stated that its investment in FTX and FTX.US – the American-based unit of the exchange – totaling $213.5 million, is marked down to $0.

Here is the note we sent to our LPs in GGFIII regarding FTX. pic.twitter.com/Cgp1Yxk1pz
— Sequoia Capital (@sequoia) November 10, 2022

Sequoia invested $150 million in FTX and FTX.US via its Global Trust Fund III, noting that the investment accounted for only 3% of the total capital in the fund. The venture capital firm reassured LPs that the fund was in good financial condition as it has realized and unrealized gains of $7.5 billion.

Chainlink Touts Proof-of-Reserve as Solution to Crypto Contagion

The crypto contagion has continued this year, with FTX compounding matters this week. This has put the spotlight on transparency, especially for centralized crypto exchanges.
Data oracle provider Chainlink has been promoting its proof-of-reserve tools, which could solve the transparency issues currently plaguing the industry.
In a tweet on Nov. 11, the Chainlink team asked if crypto will continue to repeat the mistakes of the traditional black-box financial industry.

#Crypto is at a crossroads.
Will crypto continue to repeat the mistakes of the traditional black-box financial industry? Or will a better system emerge?
A better system is possible, & Proof of Reserve is one way #Chainlink is providing the transparency that users demand.
🧵👇
— Chainlink (@chainlink) November 10, 2022

Chainlink PoR
Proof-of-reserve is also known as money-in-hand or a reserve or treasury backing up tokens or assets. They can be used by organizations to verify that there are sufficient reserves that have been independently audited. This will give customers more confidence in the asset or organization. Chainlink cited some examples:

Bahamas Regulator Freezes Assets Belonging to Beleaguered FTX Crypto Exchange

Amid the problems plaguing cryptocurrency exchange FTX, the Securities Commission of the Bahamas (SCB) has frozen the firm’s assets.
The Bahamian regulator also got the court to appoint a provisional liquidator for FTX.

In a press release posted by Nassau Guardian via Twitter on Thursday (November 10, 2022), the Commission revealed it had frozen assets of FTX Digital Markets (FDM) “and related parties.”
Back in September 2021, FTX CEO Sam Bankman-Fried announced that the company’s headquarters will be in the Bahamas.
An excerpt from the announcement reads:

“The Commission is aware of public statements suggesting that clients’ assets were mishandled, mismanaged and/or transferred to Alameda Research. Based on the Commission’s information, any such actions would have been contrary to normal governance, without client consent and potentially unlawful.”

The Bahamian regulatory watchdog also sought the appointment of a provisional liquidator for FTX from the country’s Supreme Court, with Brian Simms, an attorney, appointed by the court.
Subsequently, the exchange’s assets cannot be transferred or assigned without written approval from the provisional liquidator.
According to the press release, the latest string of unfortunate events regarding the crypto exchange caused the agency to take “a prudent cause of action” by putting the beleaguered firm “into provisional liquidation to preserve assets and stabilize the company.”
In addition to freezing assets, the Commission also suspended FTX’s registration process.
The latest development comes as FTX is battling a liquidity crisis. As recently reported by CryptoPotato, CEO Sam Bankman-Fried tendered an official apology, pledging to “do right by users.”
Bankman-Fried also revealed that he is discussing with some players in the industry after major rival Binance backed out of an acquisition deal.

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JPMorgan Thinks Bitcoin Could Plunge to $13K Following the FTX Crisis

JPMorgan’s team, led by Nikolaos Panigirtzoglou, predicted that the price of bitcoin could drop to $13,000 due to the turmoil following the FTX collapse.
The cost to produce BTC has also fallen considerably, which could be another reason for the asset’s potential downfall.
A Grim Forecast
An analysis team of the Wall Street bank estimated that the ongoing crash of the crypto market could intensify in the following days and lead to a further decline in bitcoin’s valuation. The experts determined that FTX’s crisis and the disruption of its sister company Alameda Research triggered a “cascade of margin calls” that could push the price of the primary cryptocurrency to as low as $13,000.
JPMorgan’s team opined the main problem is not the calamity of Sam Bankman-Fried’s exchange but the fact that there are not many organizations able to help:
“What makes this new phase of crypto deleveraging induced by the apparent collapse of Alameda Research and FTX more problematic is that the number of entities with stronger balance sheets able to rescue those with low capital and high leverage is shrinking.”
The drop in bitcoin’s production costs is another factor. At the moment, this stands at $15,000, “but it is likely to revisit the $13,000 low seen over the summer months,” the team said.

Canada’s Teacher’s Pension Fund Faces Investment Issue in FTX’s Liquidity Crunch

Canada’s Ontario Teachers Pension Plan (OTPP) is in jeopardy due to its large investment in the cryptocurrency exchange FTX, which is currently facing a significant liquidity crunch.
A recent report from The Globe and Mail revealed that OTPP invested in FTX a year ago when the firm was valued at $25 billion. The pension plan bought its first FTX stake in October 2022 during a $420 million funding round alongside 69 other investors.
Teachers’ Pension Plan in Trouble as FTX Shakes
Although OTPP did not reveal how much it invested in the troubled company, spokesperson Dan Madge said FTX was not on the list of investments over $200 million in the fund’s annual report for 2021.

“Given the fluid nature of the situation, we have no comment right now,” Madge said.

The investment stemmed from its Teachers’ Innovation Platform, a part of its portfolio assigned to high-risk and high-growth investments. OTPP, which manages the pensions of 333,000 active and retired Ontario teachers, currently oversees over $242 billion in assets.
OTPP’s CEO Jo Taylor told Reuters in September that FTX as an exchange carried the lowest risk in the whole crypto asset class and that the fund’s investment had grown well amid the market’s volatility.

Indonesia Plans to Tighten Crypto Regulation Following FTX’s Insolvency 

Indonesia plans to give its Financial Services Authority (OJK) the power to regulate cryptocurrency investments and market oversight.  
The country’s Trade Ministry currently polices the digital asset industry in collaboration with the Commodity Futures Trading Regulatory Agency. However, Indonesia’s finance minister, Sri Mulyani Indrawati, said the country would transfer the authority to OJK to protect consumer interests. 
Indonesia Concerned About Investors’ Assets 
Indonesia’s plans were influenced by the latest events in the industry that saw the fall of FTX, one of the biggest crypto exchanges in the world. The incident resulted in another bloodbath after Terra’s crash in May, erasing billions of dollars from the market. 
According to reports, the new plan proposed by Indrawati is part of broader legislation submitted to the government earlier this year. The country’s parliament is currently debating the bill. 
The finance minister told parliament that Indonesia needs to provide strict regulations to safeguard its entire financial sector technology innovation, including crypto assets. 

Investment Bank CEO Tried Warning SBF About FTX’s Potential Collapse

Investment banking company Jefferies Group’s CEO, Richard “Rich” Handler, took to Twitter to reveal that he unsuccessfully tried to get in touch with FTX CEO Sam Bankman-Fried earlier this year when the latter was offering bailouts to several troubled firms.
While sharing his “personal email trail” on “non-meeting with FTX,” Handler revealed several snapshots that he had sent to an unknown person enquiring if they knew Bankman-Fried.

The emails were dated July 2022. The recipient responded by saying that they have met the FTX exec once and went on to add that he was the creditor of a deal they were handling.
Handler then reverted, saying he had a lot of experience when runs occur. He expressed his willingness to meet SBF. His email read,

“What he is going through is not going to pass as quickly as he might wish and you can quickly become the rescuee versus the rescuer if you are not careful.”

The 61-year-old American businessman even asked to forward SBF a note for a quick “lunch grab” in September in the Bahamas but got no response.
In retrospect, Handler said that “just like a broken clock, even a boomer can be right sometimes.”
FTX, on the other hand, is now anticipating a fundraise from Tron’s Justin Sun after a failed deal with Binance.
The company faced a massive liquidity crisis after Binance said it will sell all of its FTT tokens. More information about the timeline of the entire FTX fiasco can be found here.

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Arthur Hayes Says FTX is Now Beyond Saving

Former BitMEX CEO Arthur Hayes believes FTX is ultimately headed for bankruptcy now that Binance has refused to rescue the company. 
The exchange co-founder offered his analysis of what the future holds for FTX on Thursday and offered some predictions for how its crisis will impact the market. 
FTX Will Go Bankrupt
In a Twitter thread on Wednesday, Hayes asserted that there is no player large enough to buy out FTX, if Binance’s CEO – the richest man in crypto – was unwilling to do so. 
Binance signed a non-binding letter of intent with FTX on Monday agreeing to purchase FTX, and help it during its “liquidity crunch.” However, the firm almost immediately backed out of the deal following an alleged government probe into FTX, and a review of FTX’s handling of customer deposits. 
Around the same time, a report emerged from the Wall Street Journal that FTX’s CEO, Sam Bankman-Fried, told investors the exchange owed depositors $8 billion. Given the magnitude of the situation, Hayes doesn’t like customers’ odds of getting their money back any time soon. 

Kraken’s Jesse Powell Blasts FTX CEO, Lists All Red Flags About SBF

The past few days were unnerving as the crypto industry watched the fall of FTX, one of the world’s largest crypto exchanges.
With FTX now insolvent, some of the biggest and oldest players in the space have started expressing disappointment at the company’s CEO, Sam Bankman-Fried (SBF), popularly known as crypto’s white knight.
Jesse Powell Blasts SBF
One such person is Jesse Powell, co-founder and former CEO of crypto exchange Kraken, who has taken to Twitter to blast SBF, listing some of his deeds and describing them as red flags.
In a 14-tweet-long thread, Powell expressed his anger about the outcome of the FTX saga and its effect on the broader crypto market. 
The Kraken co-founder argued that the crypto community’s good and trusting nature has made it an easy target for con artists, who clearly state that they have come for profits and not for the asset class, and instead of shutting them out, they are praised for their honesty.

FTX Reportedly Sent $4B to Alameda, Got Close to Losing Gibraltar License Because of Binance in 2021

FTX had reportedly reached out to several other large exchanges, including Coinbase and OKX, but was turned down. Its finances were one of the factors after the reviewal of which, Binance backed out of a planned takeover.
While Binance may have averted more scrutiny from regulators in Europe and the United States but the botched deal further aggravated the meltdown in the prices of cryptocurrencies.
The Billionairs’ Feud
Binance and FTX have been at loggerheads long before the two execs engaged in a Twitter spat. The feud dates back to May 2021, when FTX applied for a license in Gibraltar for a subsidiary. To score regulatory approval, it had to provide details about major shareholders, including Binance. However, a Reuters report suggests that Binance dodged several of FTX’s requests for help.
At least 20 such messages and emails were sent by FTX’s lawyers, as reviewed by Reuters, which requested details on CZ’s sources of wealth, banking relationships, and ownership of Binance. The CEO, on the other hand, remained unreachable, which pushed SBF to buy his stake in FTX back.
With Binance no longer in the picture, FTX-owned derivatives exchange ZUBR received approval from the Gibraltar Financial Services Commission (GFSC) as a DLT provider in September last year.