New FTX Examiner May Question Bankruptcy CEO, Lawyers | NFT Trading Soars

EXAMINER APPOINTMENT ON THE TABLE IN FTX MONDAY HEARING

FTX CEO John J. Ray is facing a key battle on Monday in his uphill campaign to avoid a third-party investigation into the FTX empire he is trying to steer through bankruptcy. Andrew R. Vara, the U.S. Trustee overseeing the case for the Justice Department, wants a neutral examiner to figure out what went wrong at the once mighty cryptocurrency conglomerate forged by Sam Bankman-Fried. Ray claims management’s own probe, supplemented by governmental inquiries, is sufficient, but his case is hampered by ties to the Sullivan & Cromwell law firm, which now represents FTX and also had dealings with the company before it filed for protection from its creditors in November. Vara is scheduled to put Ray on the stand in a direct face-off after an exchange of court filings Monday.

NFT MARKET SHOWS SIGNS OF RECOVERY

The trading volume of non-fungible tokens boomed in January, hitting $946 million, up 38%, according to a new report by decentralized application analytics platform DappRadar. There were 9.2 million transactions last month, the highest sales count in six months. Drooping token prices and fear of contagion from FTX failure shrank the market to $683 million in December from $1 billion in June.

The growth is fueled by the ease of macroeconomic tensions and launches by some of the industry’s largest players. Yuga Labs’ latest collection, Sewer Pass, made up 34.3% of all NFT transactions for January. Doodles’s acquisition of an Emmy-nominated animation studio and Moonbirds’ contract with a Hollywood talent management company also drove confidence in the market.

Source: Forbes Digital Assets, powered by Nomics. Prices as of 4:00 p.m. on February 3, 2023.

MICROSTRATEGY AND META RELEASE Q4 EARNINGS

The software analytics company reported $132.5 million in revenue, down 1.5% from a year earlier but $2.5 million above analysts’ estimates. The bottom line was another matter, as an expected $10.7 million net profit came in as a $249.67 million loss. There was a $20.52 adjusted loss per share rather than the forecast 98-cent profit, according to Bloomberg data. The outsized loss after a minor beat on sales indicates analysts may not have correctly modeled for a $197.63 million cryptocurrency impairment charge and a $35.3 million tax bite. MicroStrategy’s bitcoin holdings remained at 132,500, the same as in late December, worth roughly $3.2 billion at the current price.

Meta’s Q4 revenue was $32.2 billion, higher than the $31.5 billion expected on Wall Street, though still down 4% from last year. But the key figure investors were looking at, according to Mark Shmulik, managing director and senior analyst of U.S. internet at investment manager and researcher AllianceBernstein, was free cash flow, money that can be used to reinvest in the business or pay for dividends and stock buybacks. It came at $5.3 billion, significantly more than the $1.5 billion expected–just what investors needed to justify hefty Reality Labs expenditure. Home to the Horizon World metaverse, the Reality Labs division incurred an operating loss of $4.3 billion, bringing the total shortfall for the year to $13.7 billion.

CONGRESS IS LOOKING TO PUT CRYPTO REGULATION ON STABLE FOOTING

As the new 118th Congress finalizes committee memberships, the Republican-led House of Representatives is already showing signs of a fresh approach to the industry’s regulation. Rep. French Hill (R-Ark.), the new chair of the Subcommittee on Digital Assets, Financial Technology and Inclusion, sat down with Forbes contributor Jason Brett to share his goals for the digital assets industry. Read more here.

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ELSEWHERE

Silvergate Faces US Fraud Probe Over FTX and Alameda Dealings [Bloomberg]

Coinbase Wins Dismissal of Lawsuit Claiming It Sold Tokens Illegally [Reuters]

Mastercard's NFT Lead Exits, Selling Resignation Letter as NFT [Decrypt]