Barry Silbert’s Last Stand
A new year, a new month, another brand new set of Token Ratings. Haven’t read through yet? Here’s what to expect:
As always, the first token is available to everyone, but you’ll need to upgrade to Bankless Premium to get access to the rest. Dear Bankless Nation, Despite a rather tumultuous week for CeFi players, the market pumped. Sure, layoffs hit exchanges, the SEC sued some major crypto powers and we were subjected to more SBF musings, but the market is up around 20% week-over-week. We’ll take what we can get. For our weekly recap, we dig into:
– Bankless Team 📅 Weekly RecapHere’s a recap of the biggest crypto news from the second week of January. 1. Barry vs Cameron Part II
Cameron Winklevoss is doubling down on his open letter to Barry Silbert last week that accused the Digital Currency Group (DCG) CEO of straight-up fraud. Winklevoss penned a second open letter this week to the Board of DCG that urged them to “remove Barry Silbert as CEO, effective immediately, and install a new CEO, who will right the wrongs that occurred under Barry’s watch”.
In the letter, Winklevoss alleges that both DCG and Genesis misrepresented the latter’s financial health. They did so by pretending to fill the $1.2 billion hole from Genesis’ loan to Three Arrows Capital when they really didn’t.
This promissory note didn’t actually cover the Genesis hole because:
On top of that, prominent ex-employees of Genesis gave assurance that Three Arrows Capital losses were covered. On July 6th, ex-CEO of Genesis Michael Moro tweeted that “DCG has assumed certain liabilities of Genesis related to [3AC] to ensure we have the capital to operate and scale our business for the long-term” and ex-Head of Trading and Lending Matthew Ballensweig assured Gemini in an email that “”Losses predominantly absorbed by and netted against DCG balance sheet, leaving Genesis with adequate capitalization to continue [Business As Usual]”. This gave the illusion of Genesis’ solvency, which misled Gemini into continuing its Earn program. DCG last week shut down its wealth management division “due to the state of the broader economic environment and prolonged crypto winter” and announced staff cuts of 30%. Barry hasn’t responded directly, but he’s penned some reflections that will calm absolutely no one involved:
This is all perhaps the least of DCG’s problems, as regulators are swooping in. Bloomberg reports that the DOJ is “conducting an investigation” into the transfers between DCG and Genesis. On Thursday, the SEC filed a lawsuit against both Genesis and Gemini claiming that the Earn program represented an unregistered securities sale. 2. Sam Bankman-Fried the bloggerSam is taking some time out of house arrest to… blog. In a 2,300-ish word Substack post, Sam explained why and how FTX and Alameda imploded. TLDR: He continues to deny stealing funds, blames it on Alameda failing to hedge against a series of unforeseen market crashes, with CZ lighting the fuse. He still claims he hasn’t been involved in Alameda for years. You can read the full post here. Among the myriad of illiquid and worthless assets that FTX + Alameda had on their books pre-collapse (FTT, MAPS, OXY) was a sum of 56.3M actually liquid and valuable Robinhood (HOOD) shares worth ~$455M. Sam was trying to access those shares for his legal fees on Jan 6 only for the U.S. DOJ to seize it two days later.
But Sam’s lawyers want their payday and are filing for those shares to be returned: “Mr. Bankman-Fried has not been found criminally or civilly liable for fraud, and it is improper for the FTX Debtors to ask the Court to simply assume that everything Mr. Bankman-Fried ever touched is presumptively fraudulent”. Meanwhile, FTX has apparently recovered a whopping $5B in assets according to its bankruptcy attorney. On-chain sleuths disagree, so take that with a barrel of salt. 
$5B? 🤷♂️ I went through every wallet I can find that the FTX estate owns. Biggest positions: •$700M+ of $SOL (Most locked, so not sure why they would count it) •$575M of FTT •$371M of MAPS •$127M OXY •$90M WBTC •$82M BONA •~$500M in other random SPL tokens
3. CEX rumblingsIn an official blog post, Coinbase announced continued layoffs of about ⅕ of its workforce (~950 jobs) this week. This comes after a ~18% staff reduction in June. The announcement also confirms that Coinbase “will be shutting down several projects where we have a lower probability of success.” Crypto.com CEO Kris Marszalek announced a cut of 20% of its staff. Crypto brokerage Blockchain.com which loaned $270M to Three Arrows Capital is also laying off 28% (~110) of its staff. ConsenSys announced plans to lay off 100 of its headcount. Binance, on the other hand, is embarking on a hiring spree in the new year, it claims. At the Crypto Finance Conference in Switzerland, CEO Changpeng Zhao said the exchange is planning to increase its headcount by 15-30% in 2023.
Elsewhere in Bulgaria, police are raiding Nexo’s office in Sofia for suspected money-laundering and tax crimes. Here’s Nexo’s public statement on the matter: 
Over the years, we have turned down a lot of business because Nexo never makes compromises with regard to our very stringent anti-money laundering and know-your-customer policies. But we have always known that this is how you build a sustainable business. 1/
4. Ethereum powering upOptimism overtakes Arbitrum in daily transactions and daily active addresses this week. 
The flippening no one is talking about 👀 Optimism overtakes Arbitrum for Daily Active Addresses and Transactions per day. Very interesting
OpensSea announces support for Arbitrum Nova! 
We’re excited to now support Arbitrum Nova! @arbitrum‘s chain dedicated to social and gaming!🎮 We’re also strengthening Nova’s ecosystem by joining the Data Availability Committee (DAC) to provide access to on-chain data and help ensure data accuracy 🤝
Coinbase Ventures joins Rocket Pool’s Oracle DAO as a member. Oracle DAO is a decentralized network of nodes that relays data from the Beacon chain to Rocket Pool’s smart contracts. 
Maker has significantly increased its real-world-asset collateral in the past few months.
5. DeFi and CeDeFi newsPolygon is proposing a hard fork of its PoS chain on Jan 17th that aims to achieve two main objectives: reduce gas spikes and reduce the frequency of reorgs to improve translation finality. More CeDeFi integration incoming. Ondo Finance is launching a feature that lets stablecoin depositors on its protocol invest directly in U.S. Treasuries and bonds. These are done through Ondo on-chain tokens that are invested in BlackRock ETFs with Coinbase as the centralized custodian. 
1/ 🚨 @OndoFinance is bringing US Treasuries and institutional-grade bonds on-chain 🚨 We are making it possible for stablecoin holders to invest in US Treasuries through a daily liquid, bankruptcy-remote, tokenized fund with regulated service providers. blog.ondo.finance/announcing-tok…
Remember when the story broke about two brothers using a series of anon identities to fake billions of TVL data through Solana-based dapps back in August? The U.S. DoJ is now officially investigating the matter. El Salvador passes a law to issue Bitcoin-backed bonds, called Volcano Bonds. Finally, Amazon Web Services is partnering with Avalanche Labs to streamline the deployment of nodes in Amazon’s cloud infrastructure. 
This is a big deal. It’s not your grandfather’s “AWS partnership announcement.” Let me explain in plain English.
TechCrunch @TechCrunch
AWS partners with Avalanche to scale blockchain solutions for enterprises, governments https://t.co/8kjRLJtRbG by @jacqmelinek Other news:
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👉 If you have questions, check Twitter or the Discord! Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions This newsletter is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.
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