Genesis Trading has halted withdrawals, as courts say that FTX could have up to 1 million creditors.
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A note from the editor...
This Is Not Financial Advice
You may have seen on Twitter that a certain someone (SBF) was tweeting a heck of a lot “not financial advice.”
This isn’t a phrase reserved for Bahamian-based fraudsters potentially on the run. Crypto Twitter and YouTube (and even some news articles) pepper their content with this disclaimer like it is some kind of garlic that can ward off the vampires of the law.
However, some light Googling has led me to find that most lawyers don’t actually think that this phrase has any magical, get-out-of-jail-free quality to it. It seems that the law will not consider you free of liability for the actions of your terrible financial advice just because you said that it wasn’t financial advice.
So for all of you crypto influencers out there, if you’re thinking that this five-word disclaimer will give you protection — you better think again.
FTX Group could have more than one million creditors, its new management told a bankruptcy court judge in Delaware. But fallout from its bankruptcy keeps growing, drawing in creditors ranging from the Miami Heat to crypto lender BlockFi, which CEO Sam Bankman-Fried rescued from an earlier scrape with insolvency. That’s growing beyond the U.S., with the restructuring team contacted by “dozens of Federal, state and international regulatory agencies” it said. Among the worst hit is the Solana Foundation, which has seen its SOL token’s price halved thanks to a close association with SBF.
The crypto community has been hugely successful in raising funds for Ukraine’s war effort, raising $135 million by this summer. A disinformation campaign peddling a conspiracy theory that the bankrupt FTX exchange was helping the Biden Administration funnel money to the Democratic Party is a blatant lie, a Ukrainian Deputy Minister said. The "nonsense" narrative spread from extremist sites to the mainstream right-wing media, forcing a response. But the stories don't give any evidence, just ask questions without trying to answer them.
The Federal Reserve Bank of New York and some of the world’s largest banks have launched a test of a wholesale central bank digital currency. The 12-week proof-of-concept experiment would not be looking at a mainstream “digital dollar” usable for day-to-day purchases. Rather the DLT-based platform would be limited to financial institutions hoping to make transactions faster and cheaper. Participants include eight banks: BNY Mellon, Citi, HSBC, PNC Bank, TD Bank, Truist, U.S. Bank and Wells Fargo. Mastercard and SWIFT are also part of the experiment.
DeFi has been a big winner in the collapse of the No. 2 centralized exchange FTX, with DEXs and decentralized lenders seeing big user and transaction volume spikes. Uniswap, the largest DEX, saw users up 19% and transactions up 21%. And Uniswap Labs noted on Twitter that its daily new transacting wallets are up 55%, a 2022 high. Meanwhile, hardware wallets used for self-custody have seen a spike in sales, with Trezor up 300% and Ledger claiming it's best sales week ever.
Genesis parent Digital Currency Group blamed the halt on “extreme market dislocation and loss of industry confidence caused by the FTX implosion,” but said other businesses were unaffected. By joining lenders like SALT and BlockFi in halting withdrawals, Genesis’ action makes clear that another wave of casualties is hitting lending firms. Whether any of those will be forced into bankruptcy remains unclear. Genesis emphasized that its spot and derivatives trading business and its custody business “remain fully operational.”