Binance Bleeding Assets | Gemini And Genesis Sued By SEC

BINANCE STRUGGLING TO HOLD ONTO ASSETS

In the wake of the collapse of rival FTX, investors have been pulling their crypto off of Binance in recent weeks, and despite assurance from CEO Changpeng Zhao that the situation had stabilized, outflows from the world’s largest cryptocurrency exchange are accelerating. On December 13, Nansen, a crypto data firm, broke the news that Binance had lost $3 billion of assets over the previous week, representing 4% of the firm’s total at the time. A Forbes investigation revealed that, in fact, Binance lost 15% of its assets since a Twitter posting by Zhao on the same day he downplayed the reported withdrawals. Still, nearly a quarter of Binance assets have left the exchange in less than two months.

Investors’ lack of trust is best seen in the performances of binance coin (BNB) and binance USD (BUSD), the two tokens bearing the exchange’s name. BNB lost nearly 20% of its value since early November, and Forbes estimates that leaves about 29 million of the tokens at Binance, 51% less than disclosed by the exchange on November 10. Meanwhile, the number of BUSD stablecoins at the firm sank by 40%.

SEC SUES GEMINI AND GENESIS OVER FAILED PRODUCT FLEE

Just when it seemed the spat between Barry Silbert’s Genesis Global Capital and the Winklevoss twins’ Gemini Trust exchange could not possibly become more complicated, the U.S. government sued both of them for selling unregistered securities to retail investors.

In a complaint filed in the federal district court in Manhattan, the Securities and Exchange Commission targeted Gemini’s Earn cryptocurrency lending program, which was suspended in November after Genesis said it no longer had sufficient liquid assets to meet withdrawals. At the time, according to the SEC, Genesis held about $900 million of assets from 340,000 Gemini investors, with interest rates ranging up to 8.05% a year. Gemini canceled the program earlier this month and investors have been unable to withdraw their funds, the SEC noted in a statement.

The SEC action came two days after Cameron Winklevoss, the Gemini president, called for Silbert’s ouster as CEO of Digital Currency Group (DCG)—which owns Genesis—as he ramped up pressure to return funds to the Earn investors.

Source: Forbes Digital Assets, powered by Nomics. Prices as of 4:00 p.m. on January 13, 2023.

FTX LAW FIRM UNDER RISING SCRUTINY

Sam Bankman-Fried, the former CEO of the collapsed cryptocurrency empire, said it was still possible to make most customers whole but that lawyers from Sullivan & Cromwell may have “abandoned” attempts to do so after strong-arming him into putting most of the companies into bankruptcy protection. The claims came in a Thursday posting on Substack that provided a preview of Bankman-Fried’s defense to U.S. criminal charges that could see him imprisoned for up to 115 years. His previous criticisms of the law firm have provided the basis for one customer to file an objection to Sullivan & Cromwell as the FTX lawyer in U.S. bankruptcy proceedings.

Additionally, a Delaware bankruptcy judge ruled Thursday that FTX can put four key units up for sale, including derivatives arm LedgerX and stock-clearing platform Embed. According to a filing submitted by Kevin Cofsky, a partner at Perella Weinberg, the investment bank representing FTX, as of Sunday, approximately 117 parties have expressed interest in a potential purchase of one or more of FTX’s businesses.

COINBASE STOCK RALLIES FOLLOWING COST-CUT ANNOUNCEMENT

Shares of Coinbase Global have been recovering from their swoon of 2022 this month, as the publicly traded cryptocurrency exchange became the subject of chatter on Wall Street, with conflicting elements of cost cuts and money manager Cathie Wood’s bullishness versus a mix of negative and neutral outlooks from investment-banking analysts and a bond downgrade. The stock is at $48.28 as of Friday afternoon, up 45% from just $33.26 last Friday. The Tuesday announcement that the exchange would be firing about 20% of its workforce on Tuesday seems to have been taken as a positive development by investors.

Ark Invest’s Cathie Wood has been bullish on the stock over the last week, adding more than $7 million worth of its shares to her funds. However, major banks and bond rater Standard & Poor’s did not have quite the same sentiments. Bank of America analyst Jason Kupferberg was among the naysayers on Wall Street, downgrading the exchange to underperform from neutral, cutting the price target to $35 from $50.

The True Value Of Cryptocurrencies

The geopolitical strife taking place in Ukraine has once again underlined the true value proposition of digital currencies that are censorship resistant and easily transportable. To get in-depth research, interviews, trading signals and other valuable information unavailable anywhere else subscribe to Forbes CryptoAsset & Blockchain Advisor.

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ELSEWHERE

FTX Says It Has Located More Than $5 Billion In Cash, Liquid Assets [The Wall Street Journal]

DCG’s Crypto Broker Genesis Owes Creditors More Than $3 Billion [Financial Times]

House Republicans Plan Crypto Panel In First Move To Oversee Troubled Industry [Politico]