Gemini has been having a rough time lately, trying to recoup $900 million of their customers' funds from Genesis, and facing charges from the SEC that their Earn product was an unregistered securities offering.
Gemini lays off 10% of staff amid troubles
Gemini performed a 10% layoff, cutting roughly 100 positions. This move followed a 7% layoff in July 2022, and a 10% reduction just a month prior to that.
Binance announces that users won't be able to use SWIFT for transfers below $100,000
Binance informed its users that they would no longer be able to perform transactions below $100,000 via the SWIFT financial network. According to Binance, this was because their banking partner, Signature Bank, had announced they were implementing that floor for all cryptocurrency exchange clients.
Signature Bank has suggested it intends to step back somewhat from the crypto industry. It is one of the relatively few US banks that services crypto clients, and provided services to FTX among others.
Patrick McKenzie speculated that the change might have been related to AML/KYC, and Binance's "Bond villain compliance strategy".
Nexo fined $45 million by US SEC
More bad news for Nexo, whose Bulgarian offices were raided a week prior amidst allegations of organized financial crime. Now, the United States SEC and state securities regulators have fined the company a total of $45 million for violations of securities law — only the latest in a string of regulatory enforcement actions against companies offering interest-earning cryptocurrency accounts or lending services.
In a spin attempt rivaling those of Olympic gymnasts, Nexo wrote that the large fine was good, actually: "Nexo believes that the company has been recognized for what it truly is - a pioneer, like Uber and Airbnb, providing disruptive solutions in a fast-paced environment," they wrote.
In February, following similar action against BlockFi, Nexo stopped offering their interest program to new customers in the US. Now, Nexo will also stop offering its lending product to US customers as part of the settlement agreement.
- "Nexo Agrees to Pay $45 Million in Penalties and Cease Unregistered Offering of Crypto Asset Lending Product", United States Securities and Exchange Commission
- "Crypto Lender Nexo Is Fined $45 Million as Crackdown Widens", The New York Times
Genesis files for bankruptcy
The Genesis cryptocurrency lending platform filed for bankruptcy, following weeks of turmoil after the FTX collapse. Genesis halted withdrawals shortly after FTX's failure, and shortly afterwards warned of possible bankruptcy if they couldn't raise at least $1 billion in new capital. The past few months have also featured a public conflict between Genesis, along with its parent company DCG and DCG's CEO and founder Barry Silbert, and the Winklevoss twins behind the Gemini crypto exchange.
It remains to be seen what the impact of a Genesis bankruptcy may have on its parent company, Digital Currency Group (DCG). DCG owes Genesis more than $1.65 billion, according to bankruptcy filings, including a $1.1 billion promissory note created to absorb Genesis losses in the Three Arrows Capital collapse.
- "Genesis, a Crypto Lending Firm, Files for Bankruptcy", The New York Times
Founder of Bitzlato crypto exchange charged for processing more than $700 million in illicit funds
US authorities arrested and charged Anatoly Legkodymov, the founder of the Bitzlato cryptocurrency exchange. Although the exchange is relatively unknown, the justice department alleges that it was instrumental to darknet criminal marketplaces, including Hydra Market. The DOJ alleges that users of Hydra Market processed more than $700 million in cryptocurrency through Bitzlato, which also helped to facilitate more than $15 million in ransomware proceeds. Although Bitzlato claimed not to serve users in the United States, the DOJ claims that the exchange "did substantial business with U.S.-based customers".
- "Founder and Majority Owner of Bitzlato, a Cryptocurrency Exchange, Charged with Unlicensed Money Transmitting", U.S. Attorney's Office, Eastern District of New York
Three Arrows Capital founders seek funding for an exchange to enable customers to trade claims against firms 3AC helped to bankrupt
Kyle Davies and Su Zhu, the founders of the bankrupt Three Arrows Capital crypto hedge fund, have joined forces with Mark Lamb and Sudhu Arumugam, the founders of the CoinFLEX platform, which is undergoing restructuring due to its own solvency issues. Davies and Zhu are still on the run from liquidators. What a dream team.
The group is seeking $25 million to create a cryptocurrency exchange they're calling "GTX" for now — which they write in the pitch deck is "because G comes after F".
Not only that, but the exchange plans to focus on claims trading — that is, the trading of claims held by creditors against debtors who are undergoing bankruptcy proceedings, like FTX, Celsius, BlockFi, or Mt. Gox (throwback!). The fact that 3AC was a major catalyst in kicking off the string of bankruptcies we saw throughout 2022 was not lost on observers, with Nic Carter of the Castle Island venture capital firm commenting that the endeavor "is akin to arsonists returning to the scene of the crime and offering to charge their victims for buckets of water".
NFT GOD's wallet drained, accounts used to phish others after malware infection
According to NFT GOD, his computer was infected with malware when he clicked a sponsored link in a Google search when he went to download the streaming software OBS. This is similar to an attack in April 2022 where scammers stole millions using malicious Google ads.
According to NFT GOD, not only did the hackers drain his crypto wallet of his NFTs and crypto, including his beloved Mutant Ape, but they also hijacked his accounts to send out phishing links to his substantial followers.
The person who purchased the stolen ape (for 16.65 ETH, ~$25,800) said he was willing to sell the ape back to NFT GOD for the same price they paid for it, which seemed to be taken as good news by NFT GOD.
LendHub reports $6 million hack
In a Twitter thread, LendHub published a message stating that "hackers stole about 6 million US dollars of assets from Lendhub". They wrote that they had "locked the hacker's attack address", but whatever they meant by this was not enough to stop the thief from transferring 1,100 ETH (~$1,562,000) to Tornado Cash to tumble.
Security firm SlowMist attributed the attack to a token that had been replaced with a new version, but whose original version remained active on the platform. The attacker was able to mint and redeem tokens in the old market, while borrowing against them in the new one, ultimately making off with the majority of the assets on the platform.
Nexo raided by Bulgarian authorities
Bulgarian prosecutors raided more than 15 locations in Sofia, Bulgaria in relation to the Nexo cryptocurrency lender. A spokesperson for the prosecutors has said that the raids are "part of a pre-trial investigation aimed at neutralising an illegal criminal activity of crypto lender Nexo". These activities reportedly include setting up of an organized crime group, tax crimes, money laundering, banking activity without a license and computer fraud. Bulgarian authorities allege that Nexo has processed $94 billion through its platform over the past five years.
Authorities charged four individuals with various crimes shortly after the raid. Two were arrested and released on bail; authorities are still looking for the other two. Police have also confiscated money, computers, and crypto assets.
Within a 24-hour period after the raid was announced, Nexo experienced $45 million in withdrawals — about the same amount they normally process in an entire week — as customers rushed to get their money off the platform.
FTX liquidators get liquidated
As they tried to close an Alameda position on the Aave defi lending project, liquidators in charge of recovering customer funds lost $72,000 due to an error in their approach. The liquidators first removed extra collateral that was supporting the position, which resulted in two liquidations in nine days. The total loss was 4.05 aWBTC, which is priced at around $75,000 based on prices at the time of the transactions.
This SNAFU unfortunately means that those assets won't be available to be repaid to FTX customers, although this loss is relatively small compared to the total amount owed.