Here’s a quick breakdown of the biggest news stories and developments in the cryptocurrency sector for November 7, 2022.
1. FTX CEO Sam Bankman-Fried denies insolvency rumors
Sam Bankman-Fried, the CEO of the FTX cryptocurrency exchange, has denied rumors that the business is insolvent. In a Twitter thread, Bankman-Fried stated that FTX has sufficient funds to cover all client holdings, and clarified that FTX doesn’t invest client assets anywhere and undergoes GAAP audits. The FTX CEO also added that FTX has excess cash of more than $1 billion.
This has triggered a wave of withdrawals from the FTX exchange, as many users preferred to stay on the safe side. According to the official FTX Twitter page, the exchange is processing withdrawals, although their Bitcoin node is limited in terms of throughput. The exchange also says that stablecoin creations and redemptions are being processed.
The recent controversy surrounding FTX began with a CoinDesk report that cited a private document showing the balance sheet numbers of Alameda Research, a trading firm closely affiliated to FTX. Some members of the crypto community raised concerns about FTX’s FTT token comprising a large part of Alameda’s balance sheet. In addition, the company also held significant amounts of tokens with relatively poor liquidity.
Caroline Ellison, the CEO of Alameda Research, says that the balance sheet discussed in the report only covers “a subset of our corporate entities”. Per Ellison, the company has more than $10 billion worth of assets that aren’t reflected in the documents cited by the report.
The controversy heated up even further when Binance CEO Changpeng “CZ” Zhao said Binance intends to sell all of the FTT tokens it owns. Binance had previously invested in FTX, and sold their equity in the company for roughly $2.1 billion worth of BUSD and FTT. CZ said the exchange expects to sell off the tokens over a period of several months. CZ stirred the pot even further with another tweet in which he said that Binance’s decision to liquidate their FTT was informed by the lessons the company learned from the collapse of LUNA.
2. US Justice Department announces seizure of $3.36 billion worth of Bitcoin
The U.S. Justice Department has announced that law enforcement had seized 50,676 BTC, valued at over $3.36 billion at the time, on November 9, 2021. The massive stash of BTC was seized from the home of James Zhong, a 32-year old man who allegedly stole the Bitcoin from the Silk Road dark web marketplace. Today, the seized BTC translates to about $1.05 billion.
U.S. Attorney Damian Williams stated:
“For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery. Thanks to state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement located and recovered this impressive cache of crime proceeds.”
Per the announcement, the seizure is the second-largest financial seizure the Department of Justice has ever made. Zhong has pled guilty to one count of wire fraud, and could be facing up to 20 years in prison.
3. Santander will be blocking UK customers from making real-time payments to cryptocurrency exchanges
Sometime in 2023, Santander’s customers in the United Kingdom will no longer be able to send real-time payments to cryptocurrency exchanges. Before the block comes into effect, the bank will limit the amount users can send to crypto exchanges via real-time payments starting with November 15. The bank will introduce a limit of £1,000 per transaction, and a £3,000 for any rolling 30-day period. These limits will apply to payments made through Santander’s mobile and online banking services.
Reuters cites a Santander spokesperson as saying that the bank is introducing these measures to protect customers from cryptocurrency scams. The bank is already blocking all transfers to the Binance cryptocurrency exchange, a measure that was introduced after British regulator FCA issued a warning about Binance.
4. Circle plans to launch Euro Coin on Solana in 2023
Circle says that it will be launching its Euro Coin stablecoin to the Solana blockchain in the first half of 2023. Euro Coin was launched in June this year. It functions in the same way as the dollar-pegged USD Coin, but is instead pegged to the euro.
Sheraz Shere, the head of payments at Solana Labs, welcomed Circle’s decision to launch Euro Coin on Solana, saying that it will introduce new use cases in instant foreign exchange, lending and payments.
Euro Coin, which was initially launched on the Ethereum blockchain, had a market capitalization of around €76.5 million as of September 30.
5. Paxos plans to hire at least 130 employees in Singapore
Paxos co-founder Rich Teo says that the company plans to use Singapore as the foundation for its expansion outside the United States. The company has already secured a license from Singapore’s regulator MAS (Monetary Authority of Singapore) to offer digital token services.
The news is especially notable since not many cryptocurrency businesses have been expanding aggressively as of late—instead, we’ve seen layoffs at companies such as Digital Currency Group, Galaxy Digital, BitMEX and Dapper Labs.