FTX updates
On Wednesday, SBF sent a letter to employees that was leaked to Coindesk. He still fails to acknowledge that he illegally used user assets.
The FTX Insider who stole funds on the Saturday night following the bankruptcy announcement, has transferred most of their Ethereum to Bitcoin using the Ren crypto bridge. Ren was backed by Alameda…
Industry contagion updates
Barry Silbert from Digital Currency Group wrote a letter to shareholders last week providing an update on their businesses.
Genesis, their lending business, cannot honor withdrawals at the moment. He claims that it is just a “duration mismatch” but things look really bad. Genesis took a $1.1 billion hit when 3AC went under in June. DCG assumed the debt, but only committed to paying it back in 2032. There’s also a $575 million loan which is due in May 2023.
GBTC continues to trade at a significant discount. As a reminder, there’s no arbitrage here since the Trust does not allow redemptions.
Many capital allocators in the industry are on the sidelines, waiting to see how this situation plays out. DCG may sell GBTC units on the open market, they may ask the SEC for permission to redeem in kind for underlying Bitcoin, or they may try to sell the business.
Here’s a good article explaining their situation and why they may never recover.
Bitcoin miner capitulation:
Iris Energy unplugs $100m worth of equipment in order to sell it to cover debts. The math isn’t great… $7 million in monthly debt obligations, with only $2 million in (expected) monthly BTC revenue
Core Scientific posts a $435 million loss, and warns of “substantial doubt” to continue operations. They have $1 billion in debt to creditors including BlockFi. Ouch
Binance set up a $1 billion ecosystem recovery fund. Funds came from a cold wallet that also holds user funds. Binance confirmed that these were not user funds.
Binance releases Proof of Reserves:
Announcement here
Jesse Powell from Kraken calls them out. All this audit proved is what assets they held. But it doesn’t prove that they can match all their liabilities, including user deposits and loans. The merkle tree used could have used negative balances on some leafs
CZ responds
BlockFi has put client loans into forbearance, meaning that “amounts due, including interest and maturity payments, are placed on hold until further notice."
Elizabeth Warren and two other senators sent a letter to the Fidelity CEO to ask her to reconsider allowing clients to purchase Bitcoin for their retirement accounts
Defi News
Curve released a whitepaper and code for their crvUSD stablecoin. It will be overcollaterized and rely on an algorithm called Lending-Liquidating AMM (LLAMMA).
Curve wars: a trader borrowed 70 million CRV tokens from Aave, using USDC as collateral, and sold the majority of them in an effort to short the token’s price. He started selling at roughly $0.52. It looks like he was trying to trigger a liquidation level at $0.24, which would cause more selling, on thin order books. It was not triggered, and a short squeeze to $0.61 followed. The short seller actually left a $1.6m bad debt on AAVE. Their have already been proposals to close up this bad debt. Rumors are that it is Avraham Eisenberg, the same person who netted $47m from exploiting Mango Markets a few weeks ago.
Uniswap's new privacy policy discloses that they collect data related to cookies, operating system, browser etc. in order to optimize their products.
MakerDAO makes two changes:
renBTC will not be allowed as collateral due to uncertainties on their relationship with Alameda
Gnosis DAO token will be approved collateral
1inch releases RabbitHole, claiming to protect users from front-running. It will send a transaction directly to a validator if it is concerned about front-running.
wBTC is moving to a new multi-sig, getting rid of old signers like FTX.
Other news
ConsenSys says it collects IP addresses of MetaMask users via Infura. Dan Finlay from Metamask tweeted that they will look into stopping this. Joe Lubin, Consensys co-founder and CEO, clarified in a tweet thread that the logging is done by the RPC provider Infura, not by Metamask. He explained that Infura requires this in order to know where to send the response back to. So a user can use a different RPC provider if they wish.
TT Kullander, the Amber Group co-founder, passes away suddenly :(
Akula, an Ethereum client implementation, shuts down. They say they can’t compete with the Reth project that is funded by Paradigm.
StarkWare’s Cairo 1.0 goes open-source.
Alexey Pertsev, the Tornado Cash developer in jail in Amsterdam, will be detained for another 3 months.
OpenZeppelin released their first Security Audit of zkSync
NFTs: Magic Eden goes live on Polygon
Onomy, a DeFi protocol on Cosmos specializing in Forex, raises $10m
Matrixport is seeking to raise $100 million in funding at a $1.5 billion valuation ($50 million already committed)
Bill Ackman tweets on crypto use cases (thread #1, thread #2 clarifying his statements). “I think crypto is here to stay and with proper oversight and regulation, it has the potential to greatly benefit society and grow the global economy”