I was offline for two weeks so this one is longer than usually… Let’s get straight get into it.
FTX updates, presented chronologically
Monday Dec 12th:
SBF is arrested in the Bahamas. This followed formal notice from the US that criminal charges were being filed against SBF and extradition would be requested. Naturally, SBF canceled his virtual appearance before congress that was scheduled for the next day.
John Ray, the new CEO, released a written report a day before his testimony at Congress. A few bombshells, including:
“Questions have been raised as to why all of the FTX Group companies were included in the Chapter 11 filing, particularly FTX US. The answer is because FTX US was not operated independently of FTX.com.”
Attorneys under the new leadership of FTX filed a motion in a US court claiming that preferential treatment of Bohemian clients after FTX entered bankruptcy is a violation of bankruptcy law.
Around the time of the bankruptcy, SBF wrote to the Bahamas attorney-general that, “we have segregated funds for all Bahamian customers on FTX. And we would be more than happy to open up withdrawals for all Bahamian customers on FTX, so that they can, tomorrow, fully withdraw all of their assets, making them fully whole.” This ultimately led to this tweet.
The Bahamas regulator responded that Ray "intended only to make headlines and advance questionable agendas."
Tuesday Dec 13th:
The SEC and CFTC both officially charged SBF with fraud in separate charges.
The SEC complaint alleges that SBF masked Alameda liabilities under an account called “fiat@ftx.com”, and would refer to it as “weird Korean account”. See SEC statement here.
Separately, the US Attorney’s Office of New York indicted SBF on eight counts including conspiring to commit fraud. Another indictment related to SBF’s use of customer funds to make political donations.
The House Financial Services Committee hearing on FTX collapse took place. SBF was meant to attend virtually, but cancelled once he was arrested.
John Ray testified, confirming what he said in the report released the day prior.
John Ray said that SBF and Gary Wang minted approximately $300 million in new FTT tokens and moved hundreds of millions of dollars worth of assets into Bahamian custody after bankruptcy was filed.
Wednesday Dec 14th:
The Senate Banking Committee holds a hearing (not specifically related to FTX). SBF refused to attend, even before he was arrested, attracting criticism from senators.
Thursday Dec 15th:
Liquidators want to sell off four FTX subsidiaries that are in good standing with regulators, including FTX Japan and FTX Europe.
Ren Foundation (behind the renBTC project) proposed minting new REN tokens to get new funding after the Alameda collapse (Alameda acquired them in 2021).
Friday Dec 16th:
The liqudiators accused the Bahamas regulator of cooperating with SBF to withdraw funds after the bankruptcy was announced. The lawyer for the liquidator proposed to only grant “static” access of FTX data to the Bahamas regulator.
Monday Dec 19th:
A lawsuit is filed against Silvergate Bank, claiming that they were aware of fraud at FTX. Their shares dropped 9%.
BlockFi (who lent roughly $680m to FTX US), filed a motion to return funds to users who held funds in segregated wallets where funds were not lent out.
Tuesday Dec 20th:
SBF signs extradition papers from jail in the Bahamas.
Wednesday Dec 21st:
SBF’s extradition papers are approved, and he flies out of the Bahamas.
Caroline Ellison (Alameda CEO) and Gary Wang have pled guilty to criminal charges, and are cooperating with the FBI. They settled with the SEC and CFTC.
Thursday Dec 22nd:
Ellison and Wang’s guilty pleas are unsealed. Ellison pled guilty to seven charges of fraud and Wang pled guilty to four charges. Both are expected to spend time in prison.
SBF is granted $250m bail, with $25m secured by his parents house and money from a few friends.
It is revealed that when FTX acquired Blockfolio in 2020 for $84 million, 94% of the total was paid in FTT.
Friday Dec 23rd:
A U.S. bankruptcy court gets involved in a fight over $450 million in Robinhood shares. BlockFi, SBF and an FTX creditor called Yonathan Ben Shimon are fighting for the ownership.
Paxos claims control, and burns, $20m of tokens that were stolen by the FTX hacker in mid November.
Saturday Dec 24th:
Ronnie Abrams, the judge appointed to the SBF case, withdraws. She said her husband served as an advisor to FTX in 2021.
Tuesday Dec 27th:
The case is assigned to Judge Lewis Kaplan.
Wednesday Dec 28th:
The DoJ announces official investigation into the $400m hack of FTX funds in the hours after bankruptcy was declared.
There is a filing in Delaware by four retail clients of FTX, who claim that users should receive funds before other creditors, since their funds never belonged to Alameda or FTX.
(Planned for) Tuesday Jan 3rd:
SBF to appear in Court at the Southern District of New York.
Proof of Reserves
Paul Munter, the chief accountant of the SEC, warned investors to put little faith in crypto companies’ Proof of Reserves. WSJ article here.
OKX Proof of Reserves released on Friday Dec 23rd.
Accounting firm Mazars announced it will cease all work for its crypto exchange clients, including Proof of Reserves reports for Binance, KuCoin and Crypto.com.
Armanino also announced it will end its crypto audit services.
Other news
Visa proposed using StarkNet for automatic recurring payments. See proposal from Visa here. They did a PoC with the Argent wallet on StarkNet. This is a use case that has not yet been solved by Ethereum, since it requires a concept called account abstraction, which allows smart contracts to carry out transactions for a user.
Metamask and Paypal announced partnership where Metamask users will be able to purchase ETH from within their wallet, via a Paypal plugin.
Avraham Eisenberg, the Mango Markets exploiter, was arrested in Puerto Rico for alleged market manipulation. Affidavit against him is here.
Core Scientific (BTC miner) files for bankruptcy.
Polygon release another zkEVM testnet, claim that next step is mainnet, once a security audit is complete.
Mina Foundation releases a report on using Validity Proofs to preserve privacy for CBDCs.
Binance refuses to refund Mithril DAO 200,000 BNB tokens. The DAO deposited this as collateral before their token listing in 2018. At that time, the deposit was worth $1m, now it is worth $50m.
BitDAO approved a proposal to buy back $100m worth of their token. They have $1.7b in their treasury, and the DAO is focused on investments and grants. The token price went up 20% after the proposal was approved.
Avalanche released Banff-5, an upgrade to their subnet technology, that allows for interoperability between subnets via BLS signatures.
Due to extreme weather in the US, the mean hash rate of the Bitcoin network just dropped to 155 EH/s from 230 EH/s.
Kraken is leaving Japan, citing market conditions.
API key leaks from trading-bot platform 3Commas were confirmed.
DeFi news
Curve will deploy on zkSync mainnet in 2023. Blog post here.
Sushi DAO voted to send trading fees to the project’s treasury, instead of sending to SUSHI stakers.
CME Group launched real-time indices for rates on AAVE, Curve and Synthetix.
1inch released Fusion, which offers gasless custom swaps and protection from MEV. Behind the scenes they are just routing your order to professional market makers.
NFT news
Trump’s NFTs sold out within a few hours. They minted 45,000 NFTs, with an initial price of $99, launched on Polygon. You can see the collection on OpenSea, here. He posted on Truth Social (see here)
Scottie Pippen (NBA wall-of-famer) sold out his collection of 1000 NFTs in less than 90 seconds.
The Argentine Football Association Fan Token (minted on Socios), doubled, then fell 60% throughout the world cup.
The Pudgy Penguins floor price jumped 25% in ether terms over the past 24 hours.
Top Solana NFT projects DeGods & y00ts are headed to Ethereum and Polygon.
Polygon has partnered with Hi to make a web3-focused debit card. You can mint a personal NFT and get it printed on your card.
The Meebits collection released an album in collaboration with WarpSound. Meebit NFT holders can claim ERC-1155 tokens of the tracks for free.
China will release an NFT marketplace on a blockchain called the China Cultural Protection Chain.
Funding news
Aztec raised $100 million in Series B funding led by a16z.
Amber Group raises $300 million.
Frontrunner raised $4.75 million in a seed round. They’re building a decentralized prediction market for sports on Cosmos.