The Celsius Official Committee of Unsecured Creditors hosted a two-hour town hall shortly after the filing of the Celsius examiners’ report.
The counsel representing Celsius’ official creditor committee has denied assertions that the bids for Celsius’ crypto assets have been rejected.During a Jan. 31 Twitter Space “town hall” following the examiner’s report on Celsius, attorneys from White & Case LLP including Gregory Pesce and Aaron Colodny addressed the so-called “leaked” bids for Celsius’ crypto assets shared by crypto blogger Tiffany Fong.“The assertion that the bids have been rejected is just categorically false,” said Pesce.https://t.co/hbJ5GJchZC— Celsius Official Committee of Unsecured Creditors (@CelsiusUcc) January 31, 2023
Fong’s Jan. 27 post on Substack pointed to at least five firms that were reportedly interested in bidding on Celsius’ crypto assets including Binance, Bank To The Future, Galaxy Digital, crypto trading company Cumberland DRW and digital asset investment firm NovaWulf.At the time Fong said the bids were “for the most part, abandoned” — referring to an earlier statement from a Celsius lawyer proclaiming the bids they received so far “have not been compelling.”However, the Celsius Official Committee of Unsecured Creditors (UCC) attorney argued that this was not the case.“The bids have not been rejected. That’s just wrong, and I hope I can disabuse people of that incorrect notion today.”The attorney refrained from confirming whether bids mentioned in the leak were accurate or not but said it was “regrettable” as it reduces the flexibility the committee has in the negotiation process.“Every day, we and the debtors are providing public messages and private messages to potential investors about where they stand in the process,” explained Pesce.“The messages that we sent them […] is very planned out and structured so that we can play different parties against each other and make sure we get the last dollar for Celsius account holders because the success of that process will determine recoveries here.”“It’s therefore regrettable that this leak happened.”“It’s particularly unfortunate that this has been monetized by the source of that leak for publicizing her paid-for content page on Patreon,” he said, referring to Fong.Fong has responded to the accusation, arguing the leaked bids were 100% free with “no paywall.”“The leaked bids are NOT behind a paywall such a strange accusation,” she said.The bids were always free – I have posts behind a paywall that involve my personal life / love life which are NOT in the public interest to keep them somewhat private. The leaked bids are NOT behind a paywall such a strange accusation @CelsiusUcc— Tiffany Fong (@TiffanyFong_) January 31, 2023
The crypto blogger released details concerning the five bids on Substack last week, which can still be accessed without payment at the time of writing.Pesce said they are now investigating how the leak occurred, adding there was “significant concern that a potential investor that was involved in the process may be trying to manipulate it for their own benefit.”“All that being said, we are working very hard to make sure that we can choose a path as quickly as possible and get this bankruptcy over. We’re trying to mitigate the effects of that leak,” he said.Related: Leaked bids: Binance, Galaxy Digital among secret bidders for Celsius assetsThe UCC attorneys also added some comments in light of the recent examiner’s report on Celsius. The examiner’s report shows in excruciating detail the improper, self-serving actions that Celsius (and its founders) took at customers’ expense, causing immense hardship to thousands of people. The UCC wants any responsible parties to pay for any bad acts.— Celsius Official Committee of Unsecured Creditors (@CelsiusUcc) January 31, 2023
“I’ll be pretty blunt, you know, what Mr. Mashinsky and many members of his team did was wrong. Mr. Mashinsky lied. They covered up a lot of his lies through editing videos,” said Colodny.“They put themselves ahead of the company, and they put themselves ahead of the account holders more importantly.”The UCC lawyers said they will continue to explore a number of options for recovery including reinventing itself as a new, publicly-traded “recovery corporation,” selling off some of its mining equipment, as well as looking into “winding down Celsius or transferring crypto to a third party.”
After a bullish 2021 crypto miners sought out loans to allow them to expand, a move which has since backfired following difficult market conditions in 2022.
The holding company for the crypto-friendly bank, BankProv, has revealed it’s no longer providing loans secured by cryptocurrency mining rigs after writing off $47.9 million in loans primarily secured by them throughout 2022.According to a Jan. 31 filing with the United States Securities and Exchange Commission (SEC), BankProv has already nearly halved the proportion of its digital asset portfolio consisting of rig-collateralized debt since the quarter ending Sep. 30, 2022.The bank held $41.2 million in digital asset-related loans as of Dec. 30 last year consisting of $26.7 million worth of loans collateralized by crypto mining rigs which “will continue to decline as the Bank is no longer originating this type of loan”. The crypto mining industry has taken on huge amounts of debt during the 2021 bull market, often offering up mining rigs they own as collateral in order to lower their interest rates.Liabilities of the top ten publicly listed crypto mining firms according to recent financial statements. Source: Luxor TechnologiesThe subsequent bear market starting in 2022 resulted in tough conditions for miners, however, and many were forced to sell the Bitcoin (BTC) mining rigs they own in order to cover operating costs, causing mining hardware prices to plummet.Related: Bitcoin miner Greenidge cuts NYDIG debt from $72M to $17MDespite the falling prices, some banks who had issued mining rig-collateralized debt were forced to repossess some of the miners used as collateral.According to a previous SEC filing, BankProv repossessed mining rigs in exchange for the forgiveness of $27.4 million in loans on Sep. 30, 2022, which resulted in an $11.3 million write-off for the firm.The losses likely contributed heavily to its decision to stop issuing these types of loans, with Carol Houle, the CFO of its holding company Provident Bancorp, noting: “As we reflect on 2022, we are eager to take its lessons and emerge a better, stronger bank. Despite our 2022 losses, we enter 2023 well capitalized and well diversified.”
Around $8.8 million was lost to crypto exploits in January, a massive decline from the figures this time last year.
Aside from the bullish crypto market rally in January, there’s been more positive industry news as the month saw a decline in losses from exploits compared to the same time last year.According to data from blockchain security firm PeckShield on Jan. 31, there were $8.8 million in losses from crypto exploits in January.There were 24 exploits over the month, with $2.6 million worth of crypto being sent to mixers such as Tornado Cash. The breakdown of assets sent to mixers includes 1,200 Ether (ETH) and around 2,668 BNB (BNB).The January figures are 92.7% lower than the $121.4 million lost to exploits in January 2022.#PeckShieldAlert ~24 exploits grabbed $8.8M in January 2023. As of January 31st, 2023, ~$2.6M worth of stolen funds (~2,668 $BNB & 1,200 $ETH) were transferred into Mixers (TornadoCash, Fixedfloat, and sideshift[.]ai). pic.twitter.com/KlGmDmKFbI— PeckShieldAlert (@PeckShieldAlert) January 31, 2023
PeckShield reported the largest exploit from last month, representing 68% of the total, was the one carried out on the DeFi lending and borrowing platform LendHub which lost $6 million on Jan. 12.Other notable exploits for the month included Thoreum Finance which lost $580,000 and Midas Capital which was exploited for $650,000 in a flash loan attack.January’s figure is also down 68% from December 2022 which saw almost $27.3 million in exploit losses, according to PeckShield.Other losses not included in the data include a $2.6 million rug pull on the FCS BNB Chain token, according to DeFiYield’s Rekt database. There was a further $150,000 lost to fake BONK tokens, and a $200,000 rug pull on the Doglands Metaverse gaming platform, DeFiYield reported.A phishing attack on the GMX decentralized trading protocol on Jan. 4 also resulted in a victim losing as much as $4 million. Related: Crypto wallets combat scammers with transaction previews and blocklistsDespite the relatively quiet month, blockchain security company CertiK told Cointelegraph in early January that there is unlikely to be a slowdown in attacks and exploits this year.The firm also reported that the $62 million in crypto stolen in December was the “lowest monthly figure” in 2022.As of the end of last year, the ten largest exploits of 2022 resulted in a whopping $2.1 billion stolen from crypto protocols.
Randall Crater will pay back the millions lost by victims of his fraudulent crypto scheme and spend 100 months in jail followed by a three-year supervised release.
Founder of “My Big Coin” and convicted fraudster Randall Crater has been sentenced to 100 months in prison and has been ordered to pay over $7.6 million to the victims of his fraudulent scheme. The U.S. Department of Justice (DOJ) said on Jan. 31 that Crater was sentenced by United States District Court Judge Denise Casper in Massachusetts.The sentence comes around six months after Crater was convicted by a federal jury on Jul. 21, 2022, on four counts of wire fraud, three counts of unlawful monetary transactions and one count of operating an unlicensed money-transmitting business.Randall Crater, the founder of “My Big Coin,” a purported cryptocurrency company, was sentenced today to more than eight years in federal prison for a multi-million dollar fraud scheme uncovered by #FBI Boston and @USPIS_BOS. https://t.co/567NYPndRU pic.twitter.com/a3eKaogij4— FBI Boston (@FBIBoston) January 31, 2023
My Big Coin was founded by Crater in 2013 and falsely marketed as a cryptocurrency payment service, luring victims between 2014 and 2017.Crater claimed the coins on My Big Coin were fully functional cryptocurrencies backed by gold and that the platform had a partnership with Mastercard. Crater also marketed the “My Big Coin Exchange,” advertised as a crypto exchange where the coins could be swapped for U.S. dollars and other fiat currencies. Randall Crater’s LinkedIn account photo. Image: LinkedIn A significant portion of the $7.6 million obtained by Crater and his marketing team went towards a house, several cars and over $1 million in antiques, artwork and jewelry. U.S. Attorney Rachael Rollins said in a statement the damage done by Crater inflicted a serious amount of trauma and financial hardship on his victims:“For nearly four years, Mr. Crater perpetrated a brazen fraud scheme that preyed on investors and customers who put their faith in him and his fake business, resulting in victim losses of over $7.5 million.”“His lies and deception inflicted real trauma, pain and hardship on the lives of 55 individual victims and their families who funneled their money into bank accounts Mr. Crater controlled and used to finance his extravagant lifestyle,” she added.Related: 800 victims of ‘massive’ Bitconnect fraud to receive $17M restitutionEven after his conviction, Crater continued to protest his innocence and stated in an Oct. 21, 2022, Youtube video that a My Big Coin credit card did in fact exist and claimed an investor testified under oath to having used the card multiple times.Legal action against Crater was first initiated when now-former Judge Rya Zobel of the Massachusetts District Court on Sept. 25, 2018, ruled against a motion to dismiss a case that had been launched by the U.S. Commodity Futures Trading Commission (CFTC). The DOJ officially laid the criminal charges against Crater shortly after on Feb. 19, 2019.After Crater’s 100-month tenure behind bars, he will be subject to a supervised release for the following three years.
A report suggests companies are able to register in the U.K. very easily which makes them appear more credible to potential scam victims.
The United Kingdom is host to at least 168 companies accused of running fraudulent crypto or foreign exchange (forex) scams according to an independent analysis.A Jan. 29 joint investigation by media firms the Bureau of Investigative Journalism and the Observer suggested organized crime groups are using the U.K. as their base due to its “lax regulation.”The actual number of U.K.-based crypto or forex companies involved in scams is likely far greater than 168 as the number was calculated by reviewing lists of suspected shell companies and cross-referencing them with reports of fraudulent activity on various websites.Around half of the companies found were linked to so-called “pig-butchering scams.”A pig-butchering scams is an insidious scheme where the scammer builds trust with the victim — often incorporating romance — before convincing them to deposit money or crypto onto a trading platform or virtual wallet the scammer controls.The scammer then continues to “fatten” the victim and build further trust before persuading them to transfer a much larger sum, only to then make off with the funds.Victims were often approached on social media or through dating websites such as Tinder according to the report.Additionally, many of the victims interviewed in the report suggested the companies appeared more legitimate as they were based in the U.K. and believed they would not have been scammed had they been located elsewhere.Registering a company in the U.K. costs as little as $14.85 (£12) and requires no form of identification, making it easy for fraudulent companies to register there and gain “sham credibility.”Companies are required to provide a U.K. office address to register, however, which has led to some residential addresses being bombarded with letters intended for companies that claim to have an office there. Letters that a U.K. resident claimed to have received that were intended for shell companies registered at their address. Source: The Observer“What’s been happening in the U.K. is unconscionable,” noted financial crime investigator Graham Barrow in the report. “We have known for 20 years at least that U.K. companies are being used in these scams and that we are probably the world’s biggest provider of scam companies.”Related: UK-native stablecoin integrates into 18,000 ATMs nationwideThe U.K. government has been trying to crack down on crypto companies in the region, with the U.K. Financial Conduct Authority requiring that all businesses who carry on crypto asset activity register with them as of Jan. 10, 2020.The regulator has been very stringent with its approvals, however, with many crypto-related businesses continuing to operate as unregistered businesses as it tries to find a balance between providing a safe environment for investors and supporting innovation in the industry.
Positive signs of Bitcoin’s recovery can be seen in on-chain, spot exchange and futures data.
Bitcoin (BTC) had a rough year all throughout 2022.But fresh on-chain and futures market data show positive signs that the leading cryptocurrency by market capitalization has started to recover. After a bevy of short liquidations, the futures market is pointing toward renewed equilibrium. According to data from Glassnode, short position liquidations cleared out unhealthy market speculators, on-chain and exchange data now point to an improving spot market and exchange netflows. A large group of investors that were previously at a loss is now back in the category that Glassnode analysts label as “unrealized profits.” Massive short liquidations set the groundwork for new investors to thriveFutures data typically hold an equilibrium between longs and shorts. As the market moves, investors tend to update their futures to avoid liquidation. Conversely, in mid-January investors were caught off guard which resulted in an all-time high of 85% short liquidations. Futures liquidation long versus short ratio. Source: GlassnodeThe short liquidation dominance has helped fuel the current Bitcoin rally. In January 2023, over $495 million in short futures were liquidated. Liquidated shorts create automatic Bitcoin purchases thus driving up the BTC price. The year-to-date liquidations have three large waves that peaked at $165 million in one day of liquidations.Total liquidations. Source: GlassnodeAfter the historic amount of short liquidations, the futures market is trending towards longs. On Jan. 30, 51.46% of open interests are long positions rather than shorts. Long versus short ratio. Source: CoinglassThe liquidation of shorts not only helped Bitcoin price rally but also seemingly suggests a return of positive sentiment in the BTC market.Glassnode researchers said:“Across both perpetual swap, and calendar futures, the cash and carry basis is now back into positive territory, yielding 7.3% and 3.3% annualized, respectively. This comes after much of November and December saw backwardation across all futures markets, and suggests a return of positive sentiment, and perhaps with a side of speculation.”Bitcoin annualized premium. Source: GlassnodeCentralized exchange netflows reach equilibrium In March 2020 centralized exchange (CEX) Bitcoin balances reached an all-time high. Since the all-time high was reached, Bitcoin has flowed out of spot exchanges. Approximately 2.25 million BTC are currently held across 21 of the top exchanges, which is a multi-year low. The 11.7% of the total Bitcoin supply held on centralized exchanges was last witnessed in February 2018.Bitcoin exchange balance. Source: GlassnodeTypically throughout Bitcoin’s history, exchange inflows and outflows are similar creating an even balance. The balance was disrupted in November 2022 when net outflows of Bitcoin from exchanges reached $200 million to $300 million per day. The large outflow during this period was historic, reaching negative 200,000 Bitcoin leaving exchanges for the month. Bitcoin net position change on exchanges. Source: GlassnodeAs Bitcoin started gaining bullish momentum in January 2023, centralized exchange inflow and outflow has normalized. The netflows are now closer to neutral showing a reduction in the high outflow trend.Multiple Bitcoin investor cohorts return to the “unrealized profit” zoneBitcoin’s movement in and out of exchanges helps provide analysts an estimate for investors’ BTC acquisition price. During the 2022 bear market, only investors from before 2017 were in potential profit. Investors arriving to Bitcoin after 2018 were all at an unrealized loss. According to Glassnode researchers,“Through the 2022 downtrend, only those investors from 2017 and earlier avoided hitting a net unrealized loss, with the class of 2018+ seeing their cost basis taken out by the FTX red candle. The current rally however has pushed the class of 2019 ($21.8k) and earlier back into an unrealized profit.”Bitcoin average withdrawal price. Source: GlassnodeThe fact that a growin number of investor cohorts have returned to profitability is a good sign, especially after Bitcoin witnessed record realized losses in December 2022. Two of the largest investor groups, those who purchased BTC on Coinbase and Binance, hold an average BTC acquisition price of $21,000. As Bitcoin continues to try to reach $24,000, any upcoming correction caused by macro factors may push down the unrealized profits in these groups. Exchange average withdrawal price. Source: GlassnodePositive signs of Bitcoin’s price recovery can be seen in on-chain, spot exchange and futures data. The futures market is indicating a renewed equilibrium following a record-high amount of short liquidations. The market is now showing improved exchange netflows and spot market activity suggests that investors are slowly trickling back into the crypto market.The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
According to SIMBA Chain, the investment will go toward developing blockchain applications that will be used by several government organizations.
Blockchain solutions provider SIMBA Chain has been selected for a $30 million Strategic Technology Focus Initiative (STRATFI) by the United States Air Force (USAF). The initiative is focused on identifying and advancing technologies that could secure the future dominance of the U.S. Air Force. According to the announcement, the investment will be used to develop blockchain applications in supply chain management and programs that will be used by several government organizations, including the Office of the Undersecretary of Defense for Research & Engineering, the USAF, the U.S. Navy, the U.S. Army and the Defense Logistics Agency.SIMBA Chain has a long-standing relationship with the Department of Defense, having developed various blockchain applications to improve critical USAF activities, such as budget tokenization for better accounting and tracking of essential components for the air service branch. The STRATFI initiative will accelerate the development of SIMBA’s blockchain platform, SIMBA Blocks, which supports USAF’s strategic mission.Bryan Ritchie, CEO of SIMBA Chain, views the STRATFI initiative as a strong demand signal for blockchain technology and an opportunity to increase adoption within the commercial industry. He said, “Given the interconnectedness of the DoD supply chain, it also signals an opportunity to collaborate and increase adoption within the commercial industry.”Related: US Air Force files trademark application for ‘SpaceVerse’ initiativeAs previously noted, this is not the first time the U.S. Air Force has experimented with blockchain technology. In June 2022, Cointelegraph reported that the U.S. Air Force tapped SIMBA Chain to develop a budgeting and accounting system for tracking and monitoring the military’s cash flow and supply chain quality and management. The goal of the project, dubbed Digital Blockchain Budgeting Accountability and Tracking (DiBaT), was to tokenize all dollars within the U.S. Air Force supply chain budget and track fund movement across billing centers, purchasing teams and suppliers.
Wormhole got over 60% of the vote in the Uniswap DAO referendum, with LayerZero coming in second.
The Uniswap DAO has approved a second non-binding proposal, called a “temperature check,” to make Wormhole the official bridge for cross-chain governance of the protocol between BNB Chain and Ethereum, according to the official proposal page.BREAKING: Wormhole has won the vote to be Uniswap’s designated bridge to the Binance Chain! This is a major step forward in the development of the DeFi ecosystem. #DeFi #BNBChain #Uniswap #Wormhole— BitArchive (@ChainArchives) January 31, 2023
The proposal will now become part of a final plan to deploy Uniswap V3 to the BNB Chain, which will go up for a binding governance vote at some point in the future.Wormhole was up against three rival bridge solutions in the DAO’s referendum: LayerZero, deBridge and Celer. It got a clear majority with 62.31% of the vote. LayerZero was second with 37.58%, and DeBridge and Celer each got less than 0.1%.This is the second time the Uniswap DAO has attempted to reach consensus on the choice of bridging solutions. On Jan. 21, the DAO voted in a temp check to deploy Uniswap V3 on the BNB Chain and to utilize Celer bridge to handle cross-chain governance votes. However, even before this vote had finished, some community members had started to express security and centralization concerns regarding using Celer bridge.Related: DeFi auditor gets $40,000 for identifying Uniswap vulnerabilityOn Jan. 27, DAO members began voting on this second temperature check to decide specifically on the choice of bridge, with the understanding that the decision to deploy to BNB chain had been settled in the previous vote.The Solana-Ethereum version of Wormhole was hacked in February 2022, allowing the attacker to gain $321 million worth of crypto in one of the largest decentralized finance exploits ever. However, the Wormhole team replaced the Ether (ETH) in the bridge to reimburse users, and the BNB-Ethereum version of the bridge doesn’t seem to have been affected by the exploit.LayerZero was recently the subject of controversy, as a rival developer accused the bridging protocol of having security vulnerabilities. The LayerZero team has rejected the accusation, claiming it is misleading.
Investment bank B. Riley is already a Core Scientific creditor and tried to provide funds before the Bitcoin miner filed for Chapter 11.
Core Scientific has received permission from the bankruptcy court for the Southern District of Texas to take out a loan of up to $70 million from investment bank B. Riley, one of the company’s biggest creditors. The loan would be used to pay off the bankrupt Bitcoin miner’s existing debtor-in-possession (DIP) financing loan, which also came from B. Riley.Core Scientific stated its intention of replacing its original DIP loan in advance at the beginning of its Chapter 11 bankruptcy process, saying it would find better terms with more flexibility. The company is seeking to use $35 million to replace the original loan, with the remaining funds to be available in one or more additional borrowings.The replacement loan “is the result of extensive marketing and hard-fought negotiations with numerous potential lenders,” Core Scientific stated in its motion, and the creditors’ committee and an ad hoc shareholders’ committee approved the move. The loan will ensure Core Scientific has “sufficient liquidity to operate their businesses and administer their estates in the ordinary course for the duration of these chapter 11 cases.” #Bitcoin miner Core Scientific (#CORZ) has agreed to borrow $70 million from investment bank B. Riley to replace existing hardware and keep the company running while it goes through Chapter 11 bankruptcy. pic.twitter.com/JPRnUIXRAo— MoonDefi (@moondefi1) January 31, 2023
B. Riley had offered Core Scientific $72 million in financing in mid-December in an effort to keep the company solvent. The bank ascribed Core Scientific’s financial woes to “an aggressive, ill-conceived strategy” in its offer letter.Core Scientific filed for bankruptcy on Dec. 21.Related: Core Scientific files motion to sell over $6M in Bitmain couponsThe company received the court’s permission to take out a $37.5 million DIP loan from its creditors at 10% annual interest on Dec. 23, with an additional $37.5 million to be made available in January. A creditors’ representative told Reuters at the time that stakeholders “have faith” in the company.Core Scientific’s financial problems became known in October. In addition to high electricity and low Bitcoin (BTC) prices, the company’s financial well-being took a blow when Celsius defaulted on its bills after declaring bankruptcy.
Rally cited a “challenging year” for the crypto industry in its decision to “begin to sunset” the platform’s sidechain after Jan. 31.
Rally, a social token platform, has announced nonfungible tokens (NFTs) on its sidechain will no longer be accessible.Users reported across social media platforms that Rally said the platform’s sidechain will “begin to sunset” after Jan. 31, leaving users unable to access NFTs once the site fully shuts down. The site’s developers did not say that they would be offering another path forward in the future, but hinted at building “leaner web3 experiences and/or products on mainnet.”“2022 was a challenging year not only for the platform, but also for the entire crypto industry,” said Rally. “The team has worked relentlessly to try to find a path forward, however the challenges and macro headwinds are too overwhelming to overcome in the current environment.”Related: Social tokens will be the engine of Web3, from fanbases to incentivizationRally facilitated creators and artists launching their own social token projects and establishing independent communities directly on the platform. The “creator coins” allowed users to essentially monetize themselves, providing additional revenue.