CryptoSlate Wrapped Daily: SBF faces investor lawsuit in the US as Australia suspends FTX operations; LFG spent $2.8B on UST peg defense


The biggest news in the cryptoverse for Nov. 16 includes Gemini halting withdrawals on its Earn program, Coinbase saying it has zero exposure to Genesis Trading, and Messari estimating that FTX investors may get back up to 50% of their funds after bankruptcy process.

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Gemini Earn halts withdrawals due to ‘market turmoil’ caused by FTX fallout

The ripple effect of the FTX collapse has forced U.S.-based crypto exchange Gemini to pause withdrawals on its Earn program. According to Gemini, its lending partner Genesis Global is no longer able to process customer redemption due to an increasing liquidity crisis.

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However, Gemini claimed that only the Earns program was affected, as it maintains a full reserve for customers’ funds for other products and services.

Gemini down due to Amazon Web Services EBS outage; exchange working on restoring functions

Earlier on Nov. 16, trading services on Gemini were halted. The crypto exchange claimed it had experienced an Amazon Web Services outage which affected its database and exchange operations.

According to Gemini’s status page, wire transfers are still unavailable, however, the exchange claims that customers’ funds are safe.

Coinbase says it has no exposure to Genesis, touts ‘strong capital position’

Following Genesis’ insolvency issues due to the FTX collapse, Coinbase said it has no exposure to Genesis. Coinbase reportedly holds $1.5 billion of its capital on Chainlink and the other as Bitcoins.

Nexo says ‘real time audit’ error caused by technical malfunction, will be fixed soon

Crypto lending platform Nexo has a real-time audit function (Armanino) that displays its total assets and liabilities condition per day. Unfortunately, the audit was not updated as expected on Nov. 16, which sparked rumors that the company may be facing insolvency.

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However, a Nexo representative told CryptoSlate that the audit delay was due to a technical malfunction in Armanino’s design. Nexo confirmed that the team was working to resolve the error and automate the audit attestation to function as normal.

Audit reveals Luna Foundation Guard spent $2.8B to defend UST peg in May

Terra Luna’s audit report published by JS Held revealed that the Luna Foundation Guard and Terraform Labs spent about $2.8 billion and $613 million respectively, to defend the UST peg.

The Luna Foundation said that the audit report confirmed that the funds were not embezzled as rumors had it. Do Kwon added that Terra’s failure is different from that of FTX, where the operators misused customers’ funds.

SolChicksNFT CEO, COO leaked messages confirm up to $20M treasury fund loss

On-chain sleuth ZachXBT called out SolChicksNFT CEO and COO for failing to inform the community about a $20 million treasury fund loss due to exposure to the collapsed UST.

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In response, COO Lewis Grafton said it had disclosed the loss to its largest private holders. His response didn’t go down well with ZachXBT who took the selective disclosure as a discriminatory act against retail investors.

Messari estimates up to 50% of FTX user funds recoverable

Messari Research Analyst Kunal Goel leveraged data from Financial Times to estimate that users who lost money to the FTX collapse may receive up to 50% of their funds when the bankruptcy process is over.

According to the balance sheet breakdown, FTX’s total assets and liabilities stand at $4,109 million and $8,859 million respectively, bringing the ratio of total assets to customers deposit to equal 0.49 (approximately 50%).

DeFi protocol Oxygen held 95% of supply on FTX

Solana-based prime brokerage platform Oxygen Protocol is on the verge of collapse as a significant portion of its ecosystem liquidity is trapped on FTX.

Oxygen confirmed that it held 95% of its MAPS and OXY tokens on the bankrupt crypto exchange.

Bitfarms sold more Bitcoin than it mined in Q3

According to Bitfarms’ third-quarter report, the bitcoin mining firm mined 1,515 BTC over the period. However, it sold about 2,595 BTC to pay off some of its debts.

An investigation by mining analyst Jaran Mellerud revealed that Bitfarm’s total bitcoin holdings of 2,064, is about 141% of its loan. In the event that BTC’s price fell below $14,200, Mellerud fears that Bitfarm’s loan could be liquidated, which may threaten its continual operation.

US financial committee to hold hearing on FTX collapse in December

The United States House Committee on Financial Services has called on Sam Bankman-Fried, Alameda Research, Binance, FTX, and related entities to deliberate on the FTX collapse and its consequences for the whole crypto ecosystem.

The committee added that it will work to hold bad actors accountable so that responsible players can build a more inclusive financial system.

FTX collapse: 3AC co-founder Kyle Davies says ‘we’re looking forward to justice’

Co-founder of bankrupt Three Arrows Capital (3AC) Kyle Davies showed up on CNBC to say that the FTX empire contributed to 3AC’s collapse. Davies claimed that Alameda had counter-traded and liquidated 3AC’s position.

Davis added that Sam Bankman-Fried knew about the ill deals, but chose to conceal a lot of things. However, the 3AC founder said his company is looking forward to justice.

News from around the Cryptoverse

FTX Australia suspended

The Australian Securities and Investments Commission (ASIC) has moved to suspend FTX’s operation in the region. The commission said that it will withdraw FTX’s AFC license by Dec. 19, 2022.

Binance secures license in Abu Dhabi

Binance has received the financial service permission (FSP) license to offer its crypto services to clients in Abu Dhabi.

In a similar development, Binance CZ confirmed that his exchange has signed 8 new investment deals for some crypto projects.

Sam Bankman-Fried sued in US court

Former FTX founder Sam Bankman-Fried has been sued by investors who claim that the exchange’s yield-bearing crypto accounts violated Florida laws, according to Reuters.

Crypto Market

In the last 24 hours, Bitcoin (BTC) decreased by 1.49%  to trade at $16,576, while Ethereum (ETH) declined by 3.38% to trade at $1,210.

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Author: Christian Nwobodo

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