Hello and welcome to The Node. This is Daniel Kuhn and Xinyi Luo, here to take you through the latest in crypto news and why it matters. In today’s newsletter:
Concerns Over Genesis Insolvency Pressure Bitcoin Price: More than 50% of all bitcoin (BTC) addresses are now in the red amid continuing fallout from FTX and capital concerns at Digital Currency Group, the corporate owner of Genesis Global Trading, which paused withdrawals in its lending division last week; Grayscale, the manager of the largest investible crypto product GBTC; and CoinDesk. This is the first time the majority of bitcoin holders are “out of profit” since the coronavirus-induced crash of March 2020.
“We have no plans to file bankruptcy imminently,” a Genesis representative told Bloomberg. “Our goal is to resolve the current situation … [and] have constructive conversations with creditors.”
Bloomberg reported DCG is seeking funds to backstop losses from Binance and Apollo Global Management, which both reportedly declined to invest. Genesis jitters sent BTC to a fresh two-year low of $15,480. The price has since recovered slightly.
Tornado Dev to Remain in Jail Until at Least Late February: Alexey Perstev, who has been held in detention since August for his work on the privacy-preserving Tornado Cash protocol, has formally been charged with money laundering. The Russian national living in the Netherlands will stay in jail until at least Feb. 20.
Back in August, the U.S. Treasury Department sanctioned the Tornado Cash protocol, which was supposedly used to launder over a billion dollars in crypto. The Dutch public prosecutor brushed aside arguments that Tornado Cash was a decentralized protocol that Pertsev was powerless to control, claiming Tornado was, in fact, the same as PepperSec, a company for which Pertsev worked.
FTX Exploiter Transfers $200M in Ether to 12 Crypto Wallets: A crypto account associated with the FTX exploiter moved a total of 180,000 ETH (worth roughly $200 million) to 12 crypto wallets on Monday. The looter’s move follows Sunday’s conversion of funds to renBTC (a version of bitcoin on a decentralized ETH-BTC bridge).
Separately, the various divisions of Sam Bankman-Fried’s crumbling set of companies – FTX and Alameda Research – have $1.2 billion in cash, far below the $3.1 billion owed to the top 50 creditors, court documents filed Nov. 20 show. Today is the first scheduled FTX bankruptcy hearing.
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Putting the news into perspective
The Takeaway
Who’s Who in the FTX Inner Circle?
The downfall of FTX was swift and brutal. In a manner of eight days earlier this month, the crypto exchange – developed as a skunk-work project inside Sam Bankman-Fried’s quant-driven trading shop, Alameda Research – went from being one of the most used and valuable crypto companies ever to a pile of failed bets and worthless tokens. Recent investigations show a close-knit inner-circle of SBF operators and confidants may have had forewarning of the collapse. Read what CoinDesk has been able to uncover so far.
Overheard on CoinDesk TV…
Sound Bites
“FTX and Alameda were very connected from the start.”
– Nansen research analyst Niklas Polk, on CoinDesk TV’s “First Mover”
The Crypto Reaper comes calling for Genesis (FT – paywalled)
Investor Studied Crypto for Years, Then Missed FTX’s Red Flags (Bloomberg – paywalled)
What to Expect as FTX Debuts Biggest Crypto Chapter 11 in Court (WSJ – paywalled)
Generation C hosts Avery Akkineni of Vayner 3 and Sam Ewen from CoinDesk share how brands and marketers are using Web3 to experiment and potentially transform their businesses. Tune in to explore how Fortune 500 companies and new start-ups alike are coming to the blockchain to generate attention, gain customers and create value for their bottom line and their communities. Listen now.
