(Bloomberg) – Crypto brokerage Genesis has warned of the risk of bankruptcy amid contagion from the rapid demise of Sam Bankman-Fried’s FTX empire.
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The FTX exchange was on the radar of federal prosecutors in Manhattan long before its collapse as its sprawling trading operations worried officials.
The fall in Bankman-Fried’s businesses, including trading desk Alameda Research, is helping to reduce liquidity in crypto markets.
Concerns about Genesis and other struggling crypto firms, such as BlockFi Inc., have unnerved investors. Bitcoin is around the lowest level since November 2020.
Key stories and developments:
Crypto firm Genesis said warning of bankruptcy without new funds
US prosecutors opened an investigation into FTX months before it collapsed
Crypto Markets Slip as Genesis Warns of Possible Bankruptcy
Coinbase Hits All-Time High as Contagion Anxiety Intensifies
Cathie Wood launches into buying Coinbase as Wall Street Sours
(Time references are New York, unless otherwise specified.)
Bitcoin Holds Near Low Since Nov 2020 (7:10 a.m. HK)
Crypto markets continue to be under pressure due to concerns over the spreading fallout from the FTX crisis. Bitcoin posted losses on Tuesday, trading below $16,000 at roughly the lowest level since November 2020. A gauge of the top 100 digital assets has shrunk by more than 70% over the past year.
Crypto Firm Genesis Says Bankruptcy Warning (6 a.m. HK)
Digital asset brokerage Genesis is struggling to raise fresh funds for its lending unit, and it is warning potential investors that it may have to file for bankruptcy if its efforts fail, according to people with knowledge of the matter.
Genesis, which faced a liquidity crunch following the bankruptcy filing of crypto exchange FTX this month, spent several days seeking at least $1 billion in fresh capital, the people said. . This included talks of a potential investment from crypto exchange Binance, they said, but funding has not materialized so far.
US prosecutors opened an investigation into FTX months before it collapsed (4:14 p.m.)
Long before Sam Bankman-Fried’s FTX cryptocurrency empire collapsed this month, it was already on the radar of federal prosecutors in Manhattan.
The U.S. Attorney’s Office for the Southern District of New York, led by Damian Williams, spent several months working on an in-depth review of cryptocurrency platforms with U.S. and offshore weapons and had begun digging into operations. massive exchange of FTX, according to people familiar with the investigation.
Fidelity Must Reconsider Bitcoin Exposure in 401(k): Senators (3:43 p.m.)
Democratic Senators Dick Durbin, Elizabeth Warren and Tina Smith are urging Fidelity Investments to reconsider allowing 401(k) plan sponsors to offer Bitcoin exposure.
“The recent implosion of FTX, a cryptocurrency exchange, has made it clear that the digital asset industry is in serious trouble,” the senators said in a letter to Fidelity CEO Abigail Johnson.
Tiger Global’s Now Worthless FTX Bet Had Bain’s Due Diligence (3:03 p.m.)
Bain & Co. was among the advisory firms that helped conduct due diligence for Tiger Global Management’s investment in now-defunct crypto exchange FTX, according to people familiar with the matter.
Tiger Global, which pays Bain more than $100 million a year to seek out private companies, has now reduced its $38 million stake in FTX to zero, the people said. Sam Bankman-Fried’s oversight of a large network of FTX-related entities was one of the risks highlighted during the due diligence process, but the fund manager still believed it to be a wise investment at the time, said one of the people.
Cathie Wood continues on Coinbase Buying Spree as Wall Street Sours (12:21)
Wall Street’s waning condemnation in Coinbase Global Inc. did little to deter Cathie Wood. Instead, she scooped up shares of the struggling cryptocurrency exchange following the collapse of FTX.
Wood’s Ark Investment Management funds have purchased more than 1.3 million Coinbase shares since early November, worth about $56 million based on Monday’s trading price, according to data compiled by Bloomberg. The shopping spree, which began just as FTX’s demise began, increased Ark’s total holdings by around 19% to around 8.4 million shares. This equates to approximately 4.7% of Coinbase’s total outstanding shares.
‘Alameda Gap’ Seen Helping Dry Up Liquidity In The Crypto Market (11:26 AM)
The wiping out of Sam Bankman-Fried’s crypto empire, including its crown jewel FTX Exchange and sister trading desk Alameda Research, is helping to reduce liquidity in the crypto market.
The decline has been dubbed “Alameda Gap” by blockchain data firm Kaiko, after the trading group at the center of the storm that is closing its books. Liquidity dips typically come during periods of volatility, as trading shops pull bids and asks from their order books to better regulate risk, Kaiko noted in a Nov. 17 newsletter.
Crypto ETPs See Net Inflows of $44.4M Led by Proshares’ BITO (9:25 a.m.)
Global exchange-traded products focused on cryptocurrencies and related themes saw a net inflow of $44.4 million in the week to November 18, according to calculations by Bloomberg.
ProShares Bitcoin Strategy ETF saw net inflows of $15.7 million, followed by ProShares Short Bitcoin Strategy ETF with $12.3 million. Bitcoin-themed ETPs led inflows at $33.1 million, followed by Ether with $14 million. Solana-focused products had the largest outflows at $3.3 million, followed by Ripple ETPs with $1.4 million.
Congress Plans Hearings to Probe FTX Collapse: Crypto in DC (9:08 a.m.)
House and Senate panels are planning hearings in December on bankrupt crypto exchange FTX and its former chief executive, Sam Bankman-Fried, amid renewed calls for Congress to tighten cryptocurrency regulation and oversight. ‘industry.
The House Financial Services Committee is seeking testimony from Bankman-Fried, its trading house Alameda Research, rival exchange Binance, as well as other FTX employees. US and Bahamian authorities are also considering bringing Bankman-Fried to the United States for questioning.
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