Midas Investments platform closes after revealing they're $63.3 million in the hole

Midas Investments announced suddenly that they would be shutting down their platform, which previously enabled users to deposit cryptocurrencies which would then be invested in various defi projects. The team revealed that they had only $51.7 million in assets compared to $115 million in liabilities, a fact they had not disclosed to most of their employees.

Users with assets on the platform will see a significant haircut in what they are allowed to withdraw. Midas intends to keep 55% of the Bitcoin, ETH, or stablecoins held by users in their accounts, as well as any rewards users had earned.

Lest the users be too upset that more than half of their assets no longer belong to them, fear not: Midas will be making up the difference in a new, valueless token that does not yet exist, but that will be associated with some future project that Midas has not described yet. You're welcome!

They've also announced they will be pivoting to "CeDeFi". Yes, that is indeed short for "centralized decentralized finance". No, I am not joking.

Core Scientific Bitcoin mining firm files for bankruptcy

Core Scientific warned in October that it was teetering on the edge of bankruptcy, so it was no huge surprise when the company filed for bankruptcy protection on December 21. Core Scientific is one of the largest Bitcoin miners, responsible for around 10% of the computing power on the Bitcoin blockchain. The company operates around 143,000 miners, and host an additional 100,000.

Core Scientific is only one of many Bitcoin miners in distress, as low Bitcoin prices and other factors make mining much less profitable. Other mining firms, including Argo Blockchain and Greenidge Generation, have warned that they may face bankruptcy in the near future. Some firms, such as Iris Energy, have powered off a significant amount of their mining capacity.

Auros files for bankruptcy

Crypto market maker Auros filed for bankruptcy protection in the British Virgin Islands, not long after a missed loan repayment to the Maple defi lender in late November signaled something was amiss. At the time, Auros attributed the missed payment of 2,400 wETH (valued at ~$3 million at the time) to a "short-term liquidity issue as a result of the FTX insolvency".

Now, however, Auros is seeking a "light touch" liquidation path that would allow them to continue operations while they develop a restructuring plan. Meanwhile, they have missed another Maple loan repayment, this time for $7.5 million.

Court filings have revealed that "a significant proportion of the Company's assets" are frozen with FTX, leaving the company insolvent. These assets have an estimated value of $20 million.

Argo Blockchain faces possible bankruptcy

When the company accidentally published draft bankruptcy documents to its website, Argo Blockchain was forced to reveal that it is in last-ditch negotiations to raise capital. The company stated that they were still hoping to avoid a Chapter 11 filing, but that they were "at risk of having insufficient cash to support ongoing business operations within the next month". The company has been trying to raise $25–35 million since late August, and when a $27 million equity deal fell through in early November, the miner acknowledged it might soon have negative cash flow.

As a result of the inadvertent publication of bankruptcy documents, the London Stock Exchange and Nasdaq paused trading on the company's stock. The company published a statement saying they had requested trading be re-enabled, since they had not actually filed for bankruptcy (yet).

Digital Surge enters administration

The Australian crypto broker Digital Surge entered voluntary administration several weeks after suspending withdrawals in the wake of the FTX collapse. In their announcement, executives proposed a "proposed rescue plan" that will be voted upon by customers, and which would involve cash infusions from the company's directors.

Some of Digital Surge's customers reported having entrusted the company with hundreds of thousands of dollars from their superannuation funds (retirement pension). "I lost everything," said one customer who had put his entire superannuation of more than AU$150,000 (~US$102,000) into his Digital Surge account, where it is now frozen.

Orthogonal Trading is insolvent, defaults on $36 million in loans

The unsecured lending platform Maple Finance published a blog post announcing that they were severing ties with Orthogonal Trading, who had "misrepresented its financial position" for a month. "It is now clear that they have been operating while effectively insolvent, and it will not be possible for them to continue operating a trading business without outside investment," wrote Maple.

On December 3, Orthogonal Trading admitted to Maple that they were unable to meet loan repayments. The group was unable to repay a $10 million loan due the following day. The group has $36 million in liabilities across various loans on Maple's USDC and wETH pools.

Orthogonal Credit, a sister group to Orthogonal Trading, published a blog post distancing themselves, writing that they were "shocked and dismayed" by Trading's misrepresentation. "We are speechless by the extent of the exposure and liquidity position of Orthogonal Trading’s book of business," they wrote. They attributed the insolvency to FTX exposure.

Genesis owes $900 million to customers of Gemini Earn

After a domino effect in which Gemini suspended withdrawals from its "Earn" lending product due to Genesis suspending withdrawals due to FTX's collapse, it's been revealed by the FT that Genesis holds around $900 million in Gemini customer assets.

Gemini has formed a creditor committee to try to recoup funds from Genesis, as well as Genesis parent company DCG.

AAX customers search for executives

On November 13, the AAX cryptocurrency exchange suspended withdrawals, claiming they were dealing with a botched system upgrade. Shortly before, they had reassured their customers that they had stable reserves and no exposure to FTX.

On November 28, the company's vice president for global marketing and communications acknowledged that he had resigned from the company, explaining on Twitter that "I did fight for the community but none of the initiatives we came up with were accepted."

Upon realizing that the exchange was unlikely to resume withdrawals, some customers have taken it upon themselves to try to find AAX's executives. Some showed up at the Hong Kong headquarters, only to find it deserted. Another user appeared at their Singaporean coworking space, also to find it empty. Users have been posting leaked personal identity documents of listed executives on Telegram, hoping to locate them.

BlockFi files for bankruptcy

Crypto lending firm BlockFi has filed for Chapter 11 bankruptcy in the wake of the FTX collapse. The company was in dire straits in the spring after Terra and Three Arrows Capital blow-ups, but was bailed out in June by a $250 million loan from FTX, followed by a deal giving BlockFi a $400 million credit facility and giving FTX the "option to acquire" BlockFi.

Because of this dependency, it was no surprise when BlockFi announced they were once again in crisis following the FTX explosion. On November 15, the Wall Street Journal reported they were preparing for possible bankruptcy and considering layoffs.

On November 28, BlockFi filed for bankruptcy. Their filing estimates they have more than 100,000 creditors (the maximum option on the form), between $1–10 billion in assets, and between $1–10 billion in liabilities.

Hoo Exchange vanishes

On June 19, the Hong Kong-based crypto exchange Hoo announced that they would be pausing withdrawals for "24–72 hours" while they transferred some assets to top up their hot wallet.

Since then, there has been little communication and a series of shady activities. According to HOO CEO Rexy Wang on Twitter on July 15, Hoo employee and former Binance head of security Fang Wenbin (known as "Top") "took advantage of his position at Hoo to delete the company system privately, causing everyone in the company to be unable to access the system, resulting in a temporary failure of the main domain name". Top replied to allege that, "Rexy himself has transferred most of the assets from the platform. Employee salaries and platform users cannot withdraw coins".

At some point after that, Wang made his Twitter private. Hoo's social media channels have been inactive. On November 18, the exchange website was replaced with a post that identified the "Hoo de facto controller", Xu Tong Hua, and said: "Currently all permissions for Hoo's wallet and website programs are controlled by Mr Xu, so please contact the official email if you have any questions."

Meanwhile, customers have been active on social media complaining about the apparent fraud, and some have formed an informal group pushing for legal action against Hoo.

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