Crypto News Bites 2022/11/23
FTX & Alameda lost $3.7b before 2022 / New SBF apology, didn't realize amount of leverage / FIFA World Cup and crypto / Mattel launches NFT marketplace
Top News Summaries
FTX & Alameda lost $3.7b before 2022? New SBF apology letter, didn't realize amount of leverage. Tron & Ripple CEOs interested in assets.
Barry Silbert, DCG CEO, writes to shareholders to calm fears of bankruptcy, liability $575m due May 2023. $1.1b due June 2032.
FIFA World Cup impacts crypto after Saudi Arabia shocks Argentina in comeback win.
Mattel launches NFT marketplace. Magic Eden expands to Polygon.
More details, news and analysis below! Also follow me on Twitter!
Market Overview
Crypto markets finally saw a bit of relief, with BTC bouncing 2% yesterday after dropping as much as 28% since the FTX bankruptcy drama started. I am still cautious and while this could continue moving higher in the short term, I expect this might just be a bounce.
DCG, parent company of GBTC provider Grayscale and crypto broker Genesis, has been embroiled over bankruptcy speculation after Genesis’ lending arm halted withdrawals. CEO Barry Silbert broke his silence to address the ‘noise’ around his companies, saying DCG’s liability to Genesis is $575m due May 2023. $1.1b promissory note due June 2032, due to liabilities from Genesis related to bankrupt crypto fund Three Arrows Capital.
FTX Bankruptcy Fallout
Ripple CEO and TRON CEO both expressed interest in bidding on the assets of FTX. Some hope that FTX users with funds stuck on the exchanges will be able to recover something, but it would take years to go through bankruptcy.
Bankruptcy filings shows FTX & Alameda lost $3.7b before 2022, despite the CEO SBF boasting of huge profits, as well as the massive bull market in 2021. By comparison, FTX competitor Coinbase COIN 0.00%↑ made $3.6b net profit in 2021, while Alameda competitor Wintermute had a record year for revenue. A new internal letter SBF wrote apologizing to employees said he did not realize the full extent of the margin position. Perhaps he didn't know about how to calculate PnL either.
Crypto investigator ZachXBT maps out the movement of the funds that were drained during the FTX hack.
Metrics show in the wake of the FTX collapse, there is almost a record high amount of crypto being withdrawn from centralized exchanges. Another on-chain metric shows that there were large realized losses, and it coincides with large wallets moving BTC onto exchanges, typically done to sell their holdings. Just another data point showing the loss of trust in the industry.
Follow the Money
Thirdverse, Web3 & VR gaming studio, raised $15m in latest funding round from investors including MZ Web3, 8DAO, OKX, YGG. They are working on a blockchain game based on a top-selling manga Captain Tsubasa
Adoption
FIFA World Cup, Saudi Arabia rallies from behind to beat Argentina 2-1. No this is not a sports newsletter. Crypto allows sports betters who may not be able to place bets in their country to participate, such as the Argentine football association fan token ARG which dropped as much as 34% on the game results. Also after the win, Saudi Arabia themed NFT collection ‘The Saudis” jumped 387%.
NFTs
Mattel Launches NFT Marketplace With Hot Wheels Collection. The premiere drop features brands including McLaren and Aston Martin. Adoption, it is coming, and it looks like it will be through NFTs. Also maybe I can finally afford a lambo… nft.
NFT collector Vincent Van Dough (VVD) launches new NFT gallery called Art of This Millennium, featuring 32 artists. Previously VVD launched a NFT fund but assets were all moved to liquidators after Three Arrows Capital went bankrupt.
Crypto custodian Agis Trust offers $25m insurance policy for institutional investors’ NFTs. The policy is provided by Lloyd’s of London. This hopefully provides some peace of mind to NFT investors, and shows the rapid development of the NFT sector.
NFT marketplace Magic Eden expands onto Polygon MATIC, the 3rd blockchain they are on after Solana and Ethereum. The integration aims to support the blockchain games on Polygon via the NFT marketplace as well as a launchpad, which is like a crypto incubator program. MATIC initially rallied 13% off the lows yesterday when they made a pre-announcement, with many speculating that there would be an integration with YouTube, but after the Magic Eden announcement settled down a bit up 9% off the lows. I believe that the future of blockchain will be multichain - that is, users will interact with the app and not worry about the underlying blockchain.
Other news
Speaking of multichain… Sat.is, a multi-chain orderbook decentralized exchange (DEX), has expanded their testnet to OKX Chain OKC, which make it their 7th blockchain. The trading protocol concentrates liquidity across different chains, and the transaction speed limit is always set to the fastest chain. This upcoming protocol is a great example of being truly chain-agnostic.
Tornado Cash Developer Alexey Pertsev to Remain in Jail Until at Least Late Februrary. Pertsev has been accused of facilitating money laundering by developing his protocol, which has now been sanctioned by OFAC. One good article on the wider implications of sanctioning lines of code is written here.
Ongoing Trends
Bankruptcy of 2nd largest crypto exchange FTX causes contagion risks. How many funds & protocols have yet to announce their exposure?
Decentralization no longer just a tagline. Centralized to decentralized movement for remaining crypto traders & investors.
Global crypto adoption and increased regulation, launches of Centralized Bank Digital Currencies.
Bitcoin mining industry consolidation as margin squeezed on low BTC prices and higher costs (electricity, funding, hashrate difficulty etc).
Macro: US CPI peaking & potential slowing of Fed rate hikes / Russia Ukraine war may be thawing / China pivoting from zero-Covid policy, small steps to re-opening.
Tokens Mentioned Today
BTC ETH ARG OKC
Only a math wiz can lose in 2021