As top coins tank, crypto bros are going underground — a far cry from the heady days of last year, when the champagne was flowing.
A bankruptcy filing reveals the scale of the challenge facing BlockFi. The company estimates that it has more than 100,000 creditors on the books, and owes more than $1 billion to the three biggest. A court document shows that one of those owed money is the U.S. Securities and Exchange Commission, with an eye-watering sum of $30 million outstanding. This is linked to a $100 million settlement agreed back in February after it failed to register the offers and sales of its crypto lending product. Overall, the largest unsecured creditor is Ankura Trust Company, which acted as a trustee for the interest-bearing accounts that BlockFi offered. It's owed a whopping $729 million. In other developments, the Financial Times is reporting that BlockFi is suing Sam Bankman-Fried in an attempt to seize shares in Robinhood.
Of all the fights Elon Musk has picked since taking control of Twitter, the most dangerous may be the one he has now picked with Apple — accusing it of threatening to boot Twitter off the App Store. The billionaire has attacked the tech giant for charging a 30% fee whenever anything is purchased through an iPhone. All of this came after the entrepreneur tweeted: "Apple has mostly stopped advertising on Twitter. Do they hate free speech in America?" Twitter's removal from the App Store would have devastating consequences for the social network that Musk bought for a whopping $44 billion. It could stop iPhone and iPad owners from being able to download it — and prevent existing users from getting software updates.
Kraken had been facing a maximum fine of $272,228,964 after violating U.S. sanctions by letting Iranian nationals use its services. The penalty it's now paid? $362,000. That's just 0.133% of what it could have been — and shows that it's often worth confessing when mistakes are made. Kraken reported the violation itself, the problem was a technical flaw that allowed Iranians to get around its generally good Know Your Customer controls, and the company agreed to spend another $100,000 to improve its compliance systems. The Treasury Department's Office of Foreign Asset Control (OFAC), which imposes and regulates sanctions, has its eye firmly on crypto at the moment.
The bear market has led to a number of high-profile casualties among crypto businesses — but according to the FT, they're not the only ones suffering. A new report suggests that nightclubs in Miami have seen a marked decline in big spenders ever since the value of major cryptocurrencies plummeted, dragging NFTs down with them. The FT spoke to one hotel group that said crypto entrepreneurs were willing to blow $500,000 on renting a club exclusively for an evening — spending "insane" amounts of money. The revelers were 95% men and young "with a kind of nerdy style" with some "ordering 12 or 24 bottles of the most expensive champagne and just showering themselves without even drinking."