Silvergate bank takes $718 million loss liquidating debt during FTX collapse

Silvergate, a Californian bank that primarily serves the crypto industry, and which was FTX's primary banking partner, scrambled to cover $8.1 billion in withdrawals during the chaos surrounding the FTX collapse. This forced the bank to sell some assets at steep losses, liquidating debt at a $718 million loss. This loss far exceeds the bank's total profits since at least 2013, writes the Wall Street Journal.

Silvergate announced that they would be cutting 40% of their staff — around 200 employees. They also announced that they would be taking a $196 million impairment charge on assets they purchased from Diem — Facebook's blockchain-based payment system once known as Libra. "Given the significant changes in the digital asset industry landscape, this charge reflects the Company’s belief that the launch of a blockchain-based payment solution by Silvergate is no longer imminent," they wrote.

Silvergate's stock plunged 41% on the news.

New York Attorney General sues Celsius CEO Alex Mashinksy for defrauding investors

Alex Mashinsky sitting onstage, wearing a Madonna microphone and a t-shirt reading "Banks are not your friends." with the Celsius logoAlex Mashinsky (attribution)
As Celsius bankruptcy proceedings continue on, the New York Attorney General has come out with a lawsuit against the company's founder and CEO, Alex Mashinsky. Attorney General Letitia James accuses Mashinsky of "engag[ing] in a scheme to defraud hundreds of thousands of investors", promoting his company as a "safe alternative to banks while concealing that Celsius was actually engaged in risky investment strategies".

The lawsuit seeks to permanently bar Mashinsky from engaging in similar business in the state, and seeks disgorgement, damages, and restitution.

Sports company Fanatics jettisons its majority stake in NFT company Candy Digital

"Over the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business," wrote CEO Michael Rubin in an internal email explaining the decision to sell off Fanatic's share in NFT company Candy Digital. Candy Digital has created NFTs in partnership with MLB, Stranger Things, WWE, and various Nascar teams.

Fanatics purchased a 60% stake in Candy Digital in a $100 million Series A round in October 2021. Now, they've sold the stake to a group of investors led by Galaxy Digital for an undisclosed amount, in what Rubin wrote was "a rather straightforward and easy decision". He highlighted Fanatics' ability to "realize [when] things aren't working", he wrote in the email.

Logan Paul threatens to sue CoffeeZilla for exposing his (alleged) grift

A pixel art bear with a duckling(?) headA "Bearling" zoo creature from Paul's promised CryptoZoo game (attribution)
Influencer-turned-(alleged)-crypto-grifter Logan Paul has threatened to sue scam researcher CoffeeZilla, who has exposed Paul's "CryptoZoo" blockchain game project as his latest (alleged) scam. Paul's (alleged) scam history is not to be confused with any of the other long list of (alleged) crypto scams perpetrated by his brother, Jake, which CoffeeZilla has also helped expose.

After many attempts over the span of a year to contact Paul, directly and via his manager (who CoffeeZilla did speak with), Paul has claimed that CoffeeZilla made no attempts to get his side of the story. Instead of addressing any of the many well-researched claims about the flagrant (alleged) grift that Paul has been perpetrating, he has instead reacted in typical (alleged) cryptoscammer fashion: by threatening to sue CoffeeZilla.

NFTs reportedly stolen from influencer CryptoNovo, flipped for at least $525,000

A pixel art human head, wearing a grey hoodie and with a brown goatee, on a red-brown background.CryptoPunk #4608 (attribution)
Crypto influencer CryptoNovo tweeted, "I just got hacked!!! Are you kidding me!?!" with a screenshot of valuable CryptoPunk NFTs being transferred from their account. An attacker apparently transferred from CryptoNovo's wallet two or three CryptoPunks, one Bored Ape, one Mutant Ape, three Meebits, and two CloneX NFTs — all "blue chip" NFTs that fetch high prices.

The thief quickly flipped all of the NFTs for around 417 ETH ($525,000). It's unclear if one of the CryptoPunks was stolen, as it was transferred to a wallet to whom CryptoNovo has previously made transfers, but that NFT too was sold for 75 ETH ($94,200).

The thief made a pretty penny, but the loss to CryptoNovo is more substantial based on how much money they spent on the NFTs. They had purchased the Bored Ape in August 2021 for 30 ETH (then around $100,000), and CryptoPunk #4608 in September 2021 for 290 ETH (then $850,000).

The attack appears to have been phishing-related.

Coinbase settles with New York regulators, set to pay $100 million

Coinbase agreed to a $100 million settlement with the New York State Department of Financial Services over charges that the company violated anti-money laundering laws by performing insufficient background checks. Coinbase will pay a $50 million fine, and has committed to spending another $50 million to strengthen its KYC program.

Early last year, Coinbase was ordered by regulators to hire an outside monitor to oversee compliance. Under the settlement agreement, Coinbase will be required to continue the monitoring for at least another year as it works to improve its compliance.

Fake NFTs listed under verified collections on Magic Eden marketplace

A simplistic drawing of a girl holding a broom with a carrot at the end of it. She has blue skin and there is a bird next to her.ABC #2157 (attribution)
Magic Eden, as with many NFT marketplaces, has a verification layer that shows popular projects as "verified" to reduce the chances of people being tricked by NFTs with the same images and names that are not a part of the official collection. However, someone was able to list NFTs they had arbitrarily created on the Magic Eden marketplace in such a way that they appeared as though they were a part of a verified collection of "ABCs" NFTs. The issue also affected a handful of other collections, including the popular "y00ts" collection.

Magic Eden acknowledged the issue in a tweet, asking users to contact their support if they had bought any of the fake NFTs. Various users on Twitter had reported buying the spoofed NFTs, paying 20–50 SOL ($266–$666) for fake NFTs that appeared as though they were a part of a verified collection that usually sold for around 165 SOL ($2,200).

Clicking in to the NFT details showed that they were a part of a different collection that was not verified, but they appeared in listings among the verified NFTs, and were in some cases quickly purchased by collectors who thought they were taking advantage of a seller's mistake in listing the NFT.

Crypto payments platform Wyre to shut down or "scale back"

Crypto payments platform Wyre inked a deal to be acquired by Bolt in a $1.5 billion deal in April 2022, but the acquisition was canceled in September after the two firms "mutually agreed to continue their partnership as independent businesses". However, Wyre only made it a few more months before CEO Ioannis Giannaros abruptly emailed employees on December 30 to inform them that he would be liquidating the company, terminating services, and that nearly all employees would be let go.

Giannaros told Axios that the company was "still operating but will be scaling back".

Hackers steal $3.2 million from GMX whale

A chart of the GMX price over a one day period on January 3, 2023. Around 3pm there is a sudden drop from around $41.50 to just above $38, which then rebounds to around $40 fairly quickly before drifting back up towards $41.50.GMX/USD on January 3 (attribution)
An apparent wallet compromise netted hackers 82,519 GMX tokens from a wallet belonging to a GMX whale. The hackers exchanged these tokens for 2,627 ETH ($3.18 million), then swapped the assets cross-chain.

The sudden sale of such a large number GMX tokens (which are comparatively illiquid compared to much larger cryptocurrencies like Ethereum) caused the price to suddenly drop from ~$41.50 to ~$38 per token, though the token price recovered fairly quickly. GMX is the native token for the defi exchange of the same name.

Users of several NFT marketplaces see porn, Big Bang Theory stills appearing instead of their NFT images

A grid of Goonie NFTs from the RetroGoons project. Most are illustrations of monkey figures, but one has been replaced with a photograph of a nude woman.A collection on Magic Eden during the compromise (attribution)
Users of NFT marketplaces and explorer applications including Magic Eden, NFT Explorer, and Rand Gallery were briefly shown pornographic images and still frames from the Big Bang Theory television show instead of the expected NFT images after someone compromised a third-party image caching service. The affected NFTs used images stored on the decentralized storage system IPFS, and the NFTs themselves were not impacted. However, a third-party caching service used by the NFT platforms caused in some cases very unexpected images to display instead.

"What the fuck is happening, why my 5 years old kid watching porn JPEGs on [Magic Eden's] website" tweeted one shocked user.

The issue was resolved fairly quickly, although some visitors continued to see the unsavory images for a while longer due to browser caching.

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