SEC - Page 326

Genesis Global Capital, a crypto lending company, has hired restructuring advisors to discuss a possible bankruptcy, reports revealed on Tuesday.

The firm has sought advice from investment bank Moelis & Company to discuss its options, adding it has not made a final decision on the matter, a 22 November New York Times report claims, citing sources familiar with the matter.

The investment firm also worked with Voyager Digital after the latter suspended transactions in early July this year, citing the need to explore “strategic alternatives” just days ahead of its bankruptcy.

The company filed Chapter 11 bankruptcy in New York to restructure and “return value to customers,” it said at the time.

We have hired the best advisors in the industry to explore all possible options. Next week, we will deliver a plan for the lending business. We’re working tirelessly to identify the best solutions for the lending business, including among other things, sourcing new liquidity.

— Genesis (@GenesisTrading) November 16, 2022

In a statement to numerous media outlets, a Genesis spokesperson said: “We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”

According to sources, the troubled lending firm is seeking from $500 million to $1 billion to tackled issues from “unprecedented market turmoil,” namely the collapse of cryptocurrency trading exchange FTX.

Bloomberg reported on 22 November that Genesis owes creditors $2.8 billion. Roughly 30 percent of the loans funded “related parties” such as its parent company Digital Currency Group and its affiliate and lending wing, Genesis Global Trading. Grayscale Investments has also been affected.

Digital Currency Group owes roughly $575 million to Genesis Global Capital by May 2023, a letter from the former’s chief executive Barry Silbert read.

8) We have compiled more information for investors on our website. We hope to alleviate any potential uncertainties and reaffirm the safety and security of the assets underlying Grayscale’s products. https://t.co/MvTfUoKCdE

— Grayscale (@Grayscale) November 18, 2022

Grayscale Investments tweeted to investors: “the safety and security of the holdings underlying Grayscale digital asset products are unaffected”

Silbert also stated that his firm was set to receive $800 million USD in earnings this year, adding: “We have weathered previous crypto winters and while this one may feel more severe, collectively we will come out of it stronger.”

World-renowned crypto investor and blogger Anthony Pompliano has rallied behind the embattled crypto industry amid the collapse of Sam Bankman-Fried’s FTX.

At the Texas Blockchain Summit on Thursday, he stated that market forces would remove negative players in the cryptocurrency sector as quickly as bad businesses.

He told the audience: “It might be a little counterintuitive, but the free market is a hell of a f*cking referee. If you watch what just happened, this industry is who held the industry accountable,” he said.

According to him, the “judge, jury, and executioner” had been the ” was the “free market and the industry itself.”

Pompliano added: “CZ is the one who used market forces to take that company [FTX] down.”

Explaining further, he added: “At the end of the day, the judge, jury, and executioner was the free market and the industry itself […] The good people, they survive, the bad people, they end up getting washed out.”

He explained on CNBC in a recent discussion this week that many people were uncertain of what was taking place with the market. Continuing, he said he had business funds on FTX’s exchange along with advertising relationships.

Here is my appearance with @ScottWapnerCNBC from earlier today.

Bitcoin is one of the most important technologies in the world and these conversations help to sharpen how we all think about what is developing.

I appreciate Scott’s willingness to always discuss.

Part 1: pic.twitter.com/oFpNh7Yxma

— Pomp 🌪 (@APompliano) November 15, 2022

He added that Bitcoin was “one of the most important technologies in the world,” adding open conversations helped people to “sharpen” people’s understanding of current developments.

Pompliano has remained a staunch Bitcoin fan, namely after launching Morgan Creek Digital Assets in 2018. He founded the North Carolina-based firm with Mark Yusko and has defended the crypto mining industry’s use of energy consumption, stating that “crucial things in the world use energy.”

Based on my conversations over the last 24 hours, people are drastically underestimating how much damage has been done this week to institutional interest in both bitcoin and the broader crypto ecosystem.

— Pomp 🌪 (@APompliano) November 10, 2022

In a 10 November tweet, praised the state of the cryptocurrency market, stating that people were “drastically underestimating how much damage” had been done to interest in “Bitcoin and the broader crypto ecosystem.”

He said that Bitcoin would not just survive, but thrive “in the coming years,” adding: “But we shouldn’t ignore the fact that this week was a set back for everyone, regardless of what corner of the industry you play in.“

Concluding, explained: “When the confidence game is over for the crypto industry, the market comes back to Bitcoin.”

The Australian Securities Exchange (ASX) recently announced it had cancelled plans to allow clearing and settlements systems to use the blockchain.

ASX said in a Thursday statement it had halted activities for its Clearing House Electronic Subregister System (CHESS) replacement project after global IT consultancy Accenture conducted an independent review.

The review revealed “significant challenges with the solution design and its ability to meet ASX’s requirements.”

Accenture’s 47-page report concluded that such business workflows were “not tailored for a distributed environment,” and that the projects completion was too complex and uncertain.

It added: “Current activities on the project have been paused while ASX revisits the solution design.”

ASX had attempted to complete a distributed ledger technology (DLT) as the successor to its ageing, 25-year-old CHESS system, which managed transaction settlements and recorded shareholdings.

It aimed to launch in 2020, but was hit by the COVID-19 pandemic and calls for further testing.

Responses to ASX SNAFU

The Exchange’s chairman, Damian Roche responded, stating there were “significant technology, governance, and delivery challenges” to address.

Reserve Bank of Australia (RBA) Governor Philop Lowe slammed the decision as “very disappointing.”

Australian Securities Investment Commission (ASIC) chairman Joe Longo added the ASX had “failed to demonstrate appropriate control of the program to date,” which had “undermined legitimate expectations that the ASX can deliver a world-class, contemporary financial market infrastructure.”

According to figures, the ASX cost taxpayers from $164.6 million to $171.3 million.

Brian Armstrong, Coinbase’s chief executive and co-founder, lauded independent journalists and blockchain analysts working to tackle the ongoing FTX collapse and mismanagement of funds from Sam Bankman-Fried, its disgraced former CEO.

Armstrong tweeted on Wednesday that citizen journalists, rather than global media, had exposed the events linked to FTX’s liquidity crisis and Chapter 11 bankruptcy.

He slammed a recent NYT piece, stating: “Twitter has broken just about every piece of this FTX story using blockchain analytics, while NYT is writing puff pieces on a criminal.”

Twitter has broken just about every piece of this FTX story using blockchain analytics, while NYT is writing puff pieces on a criminal.

Feels like a turning point for citizen journalism and loss of trust in MSM.

— Brian Armstrong (@brian_armstrong) November 16, 2022

He added it was a “turning point for citizen journalism and loss of trust in [the mainstream media].”

Twittizens Unite on FTX

Speaking on the matter, Elon Musk tweeted his support for citizen journalists. He said at the time that “increased competition from citizens” would lead to increased accuracy “as their oligopoly on information is disrupted.”

Additional condemnation of the NYT piece include Polygon Studios chief executive Ryan Wyatt, who said that Sam Bankman-Fried had “committed significant crimes [which were] a disservice to all those impacted.”

Mainstream media will still thrive, but increased competition from citizens will cause them to be more accurate, as their oligopoly on information is disrupted

— Elon Musk (@elonmusk) November 11, 2022

One such journalism outlet, Whale Alert, found in early November that users had transferred roughly 23 million FTX tokens (FTT) to finance, totalling $584.8 million USD or 17 percent of market supply. The NYT did not write about the incident until 8 November, according to reports.

Twitter Spaces also hosted several meetings for The Roundtable Show, hosted by Mario Nawfal, which covered the crisis as it unfolded. It hosted several prominent people, including Kim Dotcom, Musk, and others, leading to a surge in interest related to the FTX scandal.

User Tobias Silver also revealed a major FTX Tron account hack, leading to a major investigation on the person responsible for the incident. News later revealed that Tether had blacklisted the people, found to be regular users, from moving roughly $47 million in Tether (USDT) from FTX to Kraken.

Kraken’s chief security officer later revealed them to be “normal people who have lost their life savings,” according to Silver.