Crypto contagion & more
Gemini ponders bankruptcy filing
Gemini President, Cameron Winklevoss, accuses Digital Currency Group (DCG) CEO, Barry Silbert, of engaging in “bad faith stalling tactics” as it attempts to recoup $900M of client funds lent to DCG
Gemini has an Earn program that lets customers deposit money for a ~7% yield, which came from Genesis Trading, owned by DCG
DCF owes Genesis $1.675B - debts consist of a $575M liability due in May 2023 and a $1.1B promissory note Genesis issued to 3AC
Why did SBF plead not guilty?
SBF’s downfall comes in many charges and 115 years in prison
SEC charges fraud from the undisclosed risk, and special treatment to Alameda on the FTX platform
CFTC charges on the commingling of depositor funds between FTX and Alameda, with civil charges
DOJ criminal charges on wire fraud, conspiracy, and money laundering
FTX and Alameda's executives have already begun cooperating with prosecutors
Caroline Ellison details the unlimited ‘borrowing facilities’ from FTX and providing misleading financial statements to lenders
~$1.7M of Alameda wallets were transferring funds in crypto mixers
Binance.US’s purchase of Voyager assets confronted by SEC
SEC has recently submitted a limited objection to Binance's purchase of Voyager assets and raised concerns about how it will fund the $1.02B transaction
Binance looks to pay $20M to purchase the client accounts, the $1B represents the value of customer assets which Binance would distribute to Voyager clients
What happened to LBRY
SEC filed a case against LBRY, a blockchain alternative to Youtube with less censorship and a creator reward system
LBRY allegedly had been conducting unregistered securities offerings of its LBRY Credit (LBC) token since 2016
LBRY lost its case against SEC last month after it failed to convince the appellate court that its tokens were not offered as unregistered securities
LBRY’s relationship with Ripple causes speculations regarding the outcome of the Dec. 15th judge's verdict on the SEC case
Ripple Background & Outcomes
SEC initiated legal action against Ripple Labs based on allegations that it offered unregistered securities worth $1.38B in the form of XRP tokens
In the countersuit, Ripple argued that XRP isn’t an investment contract and shouldn’t be regulated by the SEC
Ripple states that “according to the SEC, there can be an “investment contract” without any contract, without any rights granted to the purchaser, without any obligations on the issuer” and that the sale of all types of ordinary assets - diamonds, gold, soybeans - would convert into sales of securities
Sneaky Celsius Terms & Conditions
Bankruptcy Judge Glenn ruled that ~$4.2B of customers’ deposits in Celsius’s interest-bearing product belong to the firm
CEO of Celsius sued for lying to investors, concealing Celsius’s financial condition, and failing to register as required by state law
SBF fights with FTX debtors over Robinhood shares
~56M shares of Robinhood worth $460M are frozen in a brokerage account at ED&F nominally held in Emergent Fidelity Technologies
Emergent is a special-purpose holding company organized in Antigua and Barbuda, that appears to have no other business, 90% owned by SBF
BlockFi, Yonathan Ben Shimon, and SBF are competing to collect these shares
BlockFi is a prepetition creditor of Alameda seeking to sell Robinhood shares to pay BlockFi’s claim
Caroline Ellison purportedly agreed to pledge +$1B of Alameda assets to secure loan obligations to BlockFi which included Robinhood shares
Shimon is a prepetition creditor of FTX trading who has successfully appointed a receiver in Antigua to obtain control and sell Robinhood shares
SBF looks to use this for legal expenses