Bankman-Frieds Not Guilty Plea | Crypto Bank Silvergate Takeover Bait?

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NEW YORK, NEW YORK – JANUARY 03: FTX founder Sam Bankman-Fried arrives for a hearing in Manhattan… [+] Federal Court on January 3, 2023 in New York City (Photo by Michael M. Santiago/Getty Images)

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FTX FOUNDERS TRIAL SET FOR OCTOBER

Sam Bankman-Fried pleaded not guilty to eight criminal charges related to the collapse of his crypto empire FTX in Manhattan federal court on Tuesday, setting the stage for one of the most high-profile white-collar criminal trials of all time. . While the plea was expected, it puts the case on track for months of jockeying before trial. The trial itself has been given a tentative start date of October 2, and prosecutors have said they will produce the bulk of the evidence against the former billionaire within two weeks. This will give Bankman-Fried and his legal team insight into the evidence prosecutors have gathered against him. The judge also granted a request by prosecutors to bar Bankman-Fried from accessing or moving funds belonging to FTX and its associated hedge fund Alameda Research, both of which he founded.

This week, the Justice Department also moved to seize more than $400 million in FTX-linked Robinhood stock as part of an effort to take possession of the assets the company still holds after allegedly spending billions of dollars. silver dollars from customers. Lawyers for Bankman-Frieds argued in a Delaware court filing Thursday that the shares should be returned to the former CEO because the company that owns them, Emergent Fidelity Technology, is not part of the bankruptcy. Bankman-Fried owns 90% of Emergent.

SILVERGATES DEPOSITORS FLEE

Falling share prices threaten the independence of crypto-friendly banks after the company revealed that more than two-thirds of its deposits had been withdrawn in the fourth quarter. Citing a transformational change in the cryptocurrency industry that led to multiple bankruptcies last year, Silvergate provided preliminary results for the last quarter that showed its customer deposits of digital assets, the core business, fell to $3.8 billion at year-end, from $11.9 billion on September 30. .

The bank was quick to point out that it held $4.6 billion in cash and cash equivalents as of December 31, allowing it to more than meet withdrawals from all of its crypto-related clients. But the shrinkage of a company that held $14.1 billion in assets in the digital currency sector at the start of last year and a market capitalization that fell to $355 million from $4.5 billion dollars since then have put its continued existence as a stand-alone company in doubt. Shares lost more than a third of their value in the week to Friday afternoon, slipping to $11.12. Speaking on a conference call to explain its release of fourth quarter metrics, executives raised the possibility that Silvergate could find itself a takeover target, Yahoo reported, based on its bargain price, and a such a transaction could be encouraged by banking regulators.

COINBASE MOVES WITH NEW YORK

The nation’s largest cryptocurrency exchange by trading volume has agreed to pay $100 million as part of a settlement with New York regulators who allege the firm violated anti-money laundering laws money by allowing users to open accounts without performing sufficient background checks. Coinbase will pay a $50 million fine for material breaches of its compliance program, which violated state banking laws and regulations, the New York State Department of Financial Services announced Wednesday. The company has also agreed to invest an additional $50 million to help strengthen compliance over the next two years. In an enforcement action, the department said Coinbases’ compliance system failed to keep up with the dramatic and unexpected growth in exchange activity as the prices of cryptocurrencies like bitcoin more than doubled. in 2021. Paul Grewal, Chief Legal Officer of Coinbases, said the company has taken substantial steps to address these historical shortcomings.

CELSIUS FOUNDER ATTACHED WITH FRAUD LAWSUIT

New York State has sued Alex Mashinsky, the founder and former CEO of CelsiusCEL Network, claiming he engaged in a scheme to defraud hundreds of thousands of investors by offering loan products promising returns up to 17% with minimal risk. Those promises were bogus but proved hugely popular, according to the lawsuit filed Thursday in the state Supreme Court by Attorney General Letitia James. Celsius filed for federal bankruptcy protection on July 13 to stabilize its business after suspending withdrawals a month earlier. The company claimed it was unable to pay its customers because some of its assets were illiquid. The lawsuit asks that Mashinsky pay an undetermined amount of damages caused by fraudulent, deceptive and illegal acts and return all assets he acquired from them and return to investors. It is also seeking to ban him from working in the investment industry in New York. The action comes a day after investors in the Celsius 600,000 Earn accounts were told they would be at the bottom of the list of creditors in the company’s bankruptcy filing.

SOMEWHERE ELSE

DCG, parent company of Genesis, is closing its wealth management division [The Information]

Huobis HT Token Turbulent as Exchange Confirms 20% Workforce Reduction [CoinDesk]

SEC Intervenes in Binance’s US Bid to Buy Bankrupt Crypto Lender’s Assets [Financial Times]

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