Cryptocurrency Exchange

BlockFi denies rumors that majority of its assets were held on FTX

Although it admitted to “significant exposure,” the crypto lender assured clients that it has “the necessary liquidity to explore all options.”

Crypto lender BlockFi issued an official notice to its clients on Nov. 14 denying rumors that the majority of its assets were on FTX prior to the exchange’s collapse. According to an update shared by BlockFi, although a majority of its assets were not on FTX, it still has “significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX US.” 

Despite its exposure, BlockFi assured clients that it has “the necessary liquidity to explore all options” and is currently consulting with experts and advisers on how to navigate its next steps.

According to the crypto lender, it is still working on “recovering all obligations owed to BlockFi” but expects that the process may take a while, as FTX is currently working through its bankruptcy process.

With regard to its credit card product, BlockFi shared that it will provide direct details “as and when appropriate.” Meanwhile, the platform said it plans to continue its pause on many activities after determining that it could not operate business as usual in the current market climate.

BlockFi also cautioned its clients to avoid making any deposits to their BlockFi wallets or interest accounts.

Related: Former Huobi-linked entity says it has $18.1 million stuck on FTX

On Nov. 11, Cointelegraph reported that BlockFi had halted client withdrawals on its platform as part of a broader limit on platform activity in the wake of FTX’s collapse. The company shared in a Nov. 11 tweet that a “lack of clarity on the status of FTX.com, FTX US, and Alameda” had prevented it from operating normally.

BlockFi’s latest update comes only days after BlockFi’s founder and chief operating officer, Flori Marquez, assured users in a Twitter thread that all BlockFi products were fully operational, as it had a $400 million line of credit from FTX US, which is a separate entity from the global entity affected by the liquidity crunch.


CrossTower revises new offer for Voyager’s assets after FTX’s bankruptcy

Voyager reopened its bidding process after FTX US, the original winner, filed for bankruptcy on Nov. 11.

Crypto exchange CrossTower is working on a revised offer for the assets of bankrupt crypto lender Voyager Digital, a spokesperson told Cointelegraph. Voyager announced the reopening of its bidding process after FTX US, the original winner in the bid, filed for bankruptcy in the United States on Nov. 11.

“We are working on a revised offer that we feel will benefit the Voyager customers and the wider Crypto community. CrossTower has always been, and will continue to be, very community-focussed.”, the spokesperson said, without specifying an amount.

In September, FTX US secured the winning bid for the assets for approximately $1.4 billion, according to Voyager. The assets’ sale would be completed after a chapter 11 plan and an asset purchase agreement approved by the U.S. Bankruptcy Court for the Southern District of New York.

In the statement disclosed on Nov. 11, Voyager said that “the no-shop provisions of the Asset Purchase Agreement between Voyager and FTX US are no longer binding.”, adding that the bidding process was reopened, and the bankrupt company was in “active discussions with alternative bidders.”

According to the CrossTower spokesperson, the company is currently not aware of other players participating in the bidding process.

“We’re not aware of any other interest at the moment, but even if other players enter the ring, CrossTower’s priority is to ensure the best interest of the Voyager customers and the wider crypto community.”

As previously reported by Cointelegraph, along with FTX, Binance and CrossTower submitted bids to acquire Voyager’s assets, each proposing their own terms and conditions. 

CrossTower proposed keeping the existing Voyager platform and app, meaning that customers won’t have to switch platforms once the deal was closed. As part of this plan, customers would also receive their pro rata share of assets. Additionally, CrossTower’s acquisition plan would see the exchange share its revenue with Voyager customers for several years.

Although the new bidding terms are not confirmed, CrossTower spokesperson suggested that a similar proposal would be underway:

“Voyager has an incredibly loyal and engaged customer base, and it had a healthy business. We believe that the Voyager foundation can be built upon.”

In the statement about the bidding, Voyager also confirmed its exposure to the FTX collapse, with a “balance of approximately $3 million at FTX, substantially comprised of locked LUNA2 and locked SRM that it was unable to withdraw because they remain locked and subject to vesting schedules.”

Voyager also claimed that it did not transfer any assets to FTX in connection with the sale agreement. FTX US previously submitted a $5 million “good faith” deposit as part of the auction process, which is held in escrow.

CrossTower revises new offer for Voyager’s assets after FTX’s bankruptcy

Voyager reopened its bidding process after FTX US, the original winner, filed for bankruptcy on Nov. 11.

Crypto exchange CrossTower is working on a revised offer for the assets of bankrupt crypto lender Voyager Digital, a spokesperson told Cointelegraph. Voyager announced the reopening of its bidding process after FTX US, the original winner in the bid, filed for bankruptcy in the United States on Nov. 11.

“We are working on a revised offer that we feel will benefit the Voyager customers and the wider Crypto community. CrossTower has always been, and will continue to be, very community-focussed,” the spokesperson said, without specifying an amount.

In September, FTX US secured the winning bid for the assets for approximately $1.4 billion, according to Voyager. The assets’ sale would be completed after a Chapter 11 plan and an asset purchase agreement approved by the U.S. Bankruptcy Court for the Southern District of New York.

In the statement disclosed on Nov. 11, Voyager said that “the no-shop provisions of the Asset Purchase Agreement between Voyager and FTX US are no longer binding,” adding that the bidding process was reopened, and the bankrupt company was in “active discussions with alternative bidders.”

According to the CrossTower spokesperson, the company is currently not aware of other players participating in the bidding process:

“We’re not aware of any other interest at the moment, but even if other players enter the ring, CrossTower’s priority is to ensure the best interest of the Voyager customers and the wider crypto community.”

As previously reported by Cointelegraph, along with FTX, Binance and CrossTower submitted bids to acquire Voyager’s assets, each proposing their own terms and conditions. 

CrossTower proposed keeping the existing Voyager platform and application, meaning that customers won’t have to switch platforms once the deal was closed. As part of this plan, customers would also receive their pro rata share of assets. Additionally, CrossTower’s acquisition plan would see the exchange share its revenue with Voyager customers for several years.

Although the new bidding terms are not confirmed, CrossTower spokesperson suggested that a similar proposal would be underway:

“Voyager has an incredibly loyal and engaged customer base, and it had a healthy business. We believe that the Voyager foundation can be built upon.”

In the statement about the bidding, Voyager also confirmed its exposure to the FTX collapse, with a “balance of approximately $3 million at FTX, substantially comprised of locked LUNA2 and locked SRM that it was unable to withdraw because they remain locked and subject to vesting schedules.”

Voyager also claimed that it did not transfer any assets to FTX in connection with the sale agreement. FTX US previously submitted a $5 million “good faith” deposit as part of the auction process, which is held in escrow.

Huobi and Gate.io under fire for allegedly sharing snapshots using loaned funds

A wallet address linked to the Huobi exchange was found transferring 10,000 ETH to Binance and OKX deposit wallets soon after releasing its asset snapshot.

To counter the rising mistrust among crypto investors following the FTX collapse, crypto exchanges unanimously decided to share proof of reserve with the public as a way to showcase legitimacy. However, certain anomalies found during on-chain investigations suggest foul play and market manipulation.

Just two days after Crypto.com made its cold storage information public, investigators found that 320,000 Ether (ETH) was sent to Gate.io on Oct. 21, 2022. However, Kris Marszalek, the CEO of Crypto.com, dismissed any wrongdoing by stating that the funds were transferred accidentally and were eventually returned back to the original storage.

Gate.io released asset snapshot on Oct. 28. Source: Colin Wu

On Oct. 28, Gate.io released its proof of reserves snapshot, which, Solidity developer Shegen alleged, was done using Crypto.com’s funds, and questioned:

“This was topping up for the proof. Gate and crypto.com are fucked?”

Moreover, the crypto community suspects Huobi of attempting a similar manipulation. A wallet address linked to the Huobi exchange was found transferring 10,000 ETH to Binance and OKX deposit wallets soon after releasing its asset snapshot.

Blockchain investigator Colin Wu pointed out the transactions on Etherscan, which proves that Huobi had shown 14,858 ETH in its latest snapshot, which has since fallen down to 2,463.5 ETH at the time of writing.

Huobi’s wallet information. Source: Etherscan

While Huobi is yet to publicly retaliate against the claims put forth by the crypto community, Gate.io founder Lin Han revealed their side of the story. Han argued that the snapshot in question was taken on Oct. 19, two days before Crypto.com’s accidental fund transfer of 320,000 ETH.

Han further reiterated that Crypto.com’s funds came in after the snapshot was released and shared relevant proof for the community’s satisfaction.

The possibility of multiple crypto exchanges working together to manipulate investor funds has forced the community to keep their guard up until an official statement. Huobi has not yet responded to Cointelegraph’s request for comment.

Related: Binance shares wallet addresses and activity after proof-of-reserve pledge

As more crypto exchanges make their cold storage information public, the immutable nature of blockchain technology will allow investors and investigators to dive into the history of the exchange’s operations.

“Our objective is to allow users of our platform to be aware and make informed decisions that are aligned with their financial goals,” said Binance while revealing wallet addresses.

Crypto.com accidentally sends 320k ETH to Gate.io, recovers funds days after

Crypto.com CEO confirmed the return of the funds and reassured the investors that new processes and features were implemented to prevent a reoccurrence.

The fall of FTX highlighted the importance of proof of reserves in averting risks and improving investor confidence, urging leading crypto exchanges to publicly list down their cold and hot wallet addresses. When trying to confirm the availability of funds on Crypto.com, cold store information revealed a suspicious transfer of 320,000 Ether (ETH) to a wallet address linked to Gate.io on Oct. 21, 2022.

On chain data confirms the transfer of 320,000 ETH from Crypto.com to Gate.io. Source: Etherscan

Community member jconorgrogan raised concerns about the transfer of 320,000 ETH from Crypto.com’s cold wallet to Gate.io, considering that the former claims that 100% of user-owned cryptocurrencies are held offline in cold storage in partnership with hardware wallet provider Ledger.

As discussions picked up steam, Kris Marszalek, the CEO of Crypto.com, revealed that the funds — representing 82% of Crypto.com’s ETH holding in the cold storage at the time of writing — were sent accidentally to Gate.io:

“It was supposed to be a move to a new cold storage address, but was sent to a whitelisted external exchange address.”

Speaking to Cointelegraph, Crypto.com spokesperson clarified that the whitelisted address on Gate.io was owned by Crypto.com. Regardless, Marszalek confirmed that Gate.io returned the funds to Crypto.com’s cold storage and reassured the investors that new processes and features were implemented to prevent a reoccurrence.

While on-chain data confirms that Gate.io returned 285,000 ETH back to Crypto.com, Marszalek stated that all funds were returned. Further investigation showed that the missing 35,000 ETH was sent to a different address, which is yet to be confirmed by the crypto exchange.

In a series of tweets, Marszalek later explained what transpired while confirming that all of Crypto.com’s operations were functioning normally.

It’s not the first time Crypto.com made headlines for an accidental transfer. Back in August 2022, it was found that Crypto.com accidentally sent AUD $10.5 million (worth over $7 million) to Melbourne-based investors, which was supposed to be an AUD $100 ($67) refund. The incident occurred back in May 2021 but was not discovered until an annual audit in December 2021.

Related: Crypto.com commits to proof-of-reserves after halting FTX-backed Solana deposits and withdrawals

Marszalek promised to publish Crypto.com audited proof of reserves on November 10 while highlighting the importance of transparency and user’s safety.

With most crypto businesses willing to share their proof of reserves, investors now have the opportunity to confirm the existence of their funds, which ultimately prevents business owners from misusing the cold storage funds.

FTX reportedly hacked as officials flag abnormal wallet activity

Wallets tied to FTX and FTX US have seen $659 million in cumulative outflows over the past 24 hours, according to Nansen.

Collapsed cryptocurrency exchange FTX reportedly faced a series of unauthorized transactions over the weekend, prompting several warnings from users and analysts against interacting with its mobile application or website. 

Wallets associated with FTX saw roughly $266.3 million worth of outflows on Nov. 11, according to analytics firm Nansen. FTX US, a separate entity operating in the United States, was reportedly drained of $73.4 million.

The magnitude of the alleged attack appears to have intensified overnight, with net outflows from FTX and FTX US totaling $659 million, according to Nansen data journalist Martin Lee. That represents roughly one-third of the wallets’ net outflows over the past seven days.

FTX US general counsel Ryne Miller confirmed on Nov. 12 that the transactions were unauthorized and that FTX US had moved all remaining crypto into cold storage as a precaution.

A Nov. 12 blog post from blockchain forensics firm Elliptic suggests that the drain has seen various tokens on Ethereum, BNB Smart Chain and Avalanche removed. However, they said that of the $663 million drained, around $477 million is suspected of having been stolen, while the remainder is believed to be moved into secure storage by FTX themselves. 

An administrator for FTX’s Telegram group confirmed that the exchange was hacked and urged users not to use the FTX website due to potential security vulnerabilities. “Don’t go on ftx site as it might download Trojans,” wrote community administrator Rey. 

An administrator for FTX’s official Telegram group confirmed that the exchange was hacked. Source: Telegram.

FTX’s meltdown and apparent security breach were documented in near real-time on Twitter, with some users claiming that FTX customers were receiving SMS messages and emails urging them to log into the app and website, which have since been infected with a Trojan.

Kraken’s chief security officer Nick Percoco later Tweeted that they were aware of the user’s identity but did not share any more information publicly. 

Related: Sam Bankman-Fried apologizes for FTX liquidity crisis: ‘I fucked up twice’

At the beginning of the week, FTX held the reigns as a top-three cryptocurrency exchange. Its monumental collapse began on Nov. 7 when Binance CEO Changpeng Zhao tweeted that his exchange would be liquidating its entire FTX Token (FTT) position amid insolvency rumors and shady business dealings with sister firm Alameda Research. The announcement prompted a bank run on FTX, from which it could not recover.

On Nov. 11, former FTX CEO Sam Bankman-Fried announced that FTX, FTX US and Alameda Research were filing for bankruptcy.

Update Nov. 12, 11:20 pm UTC: Added information from Elliptic and a Tweet from Kraken’s chief security officer claiming to know the identity of the exploiter. 

Genesis receives additional equity infusion of $140M following recent market events

According to the company, this will bolster its position as a global leader in crypto capital markets.

Genesis trading announced on Nov. 10 that it will receive an additional equity infusion of $140 million from its parent company, Digital Currency Group. According to the company, this decision was made to “strengthen its balance sheet” and boost its “position as a global leader in crypto capital markets.”

Genesis said it also hopes that the equity infusion will put its company in a position to support its clients and “the growing demand” for its services. This is according to a snapshot of a letter sent to its clients, as shared by Wu Blockchain on its Twitter account.

On Oct. 10, Genesis trading revealed that its derivatives business had around $175 million worth of funds locked away in an FTX trading account. Although FTX is facing a “liquidity crunch” and has recently filed for bankruptcy, Genesis assured its clients that the millions of dollars locked in FTX would not impact its market-making activities.

Genesis also reassured its clients that it doesn’t have “an ongoing lending relationship with FTX or Alameda.” In light of recent market events that have taken a toll on the entire cryptocurrency industry, many companies are distancing themselves from the FTX fallout, including Tether, Circle, Kraken, and Coinbase, whic have all openly declared that they are not exposed to the troubled firms.

Related: Genesis Trading reveals $175M of funds are locked in FTX

In July, Genesis Trading was among the prominent lending firms that had exposure to the now-liquidated Singaporean crypto hedge fund Three Arrows Capital (3AC). Back then, former CEO Michael Moro shared that the firm had managed to mitigate losses after 3AC had failed to meet a margin call on capital borrowed from Genesis.

‘Need to update my LinkedIn’ — FTX Ventures head resigns: Report

Amy Wu’s resignation followed the news 134 companies associated with the FTX Group would be filing for bankruptcy under Chapter 11 in the United States.

Amy Wu, an investor in FTX and the head of the firm’s venture capital arm, FTX Ventures, has reportedly resigned her position.

According to a Nov. 11 report from The Information, Wu resigned as head of FTX Ventures following the announcement FTX would be moving forward with bankruptcy proceedings in the United States. According to her LinkedIn profile, Wu had been based at FTX Venture’s offices in The Bahamas since January.

FTX Ventures’ website along with that of Alameda Research went dark on Nov. 9 amid its parent company’s liquidity crisis and deal with Binance falling apart. Wu said on Twitter at the time that she was learning about events affecting the company at the same time as everyone else through social media, and suggested she would update her LinkedIn profile for new job opportunities.

Wu’s resignation followed the news 134 companies associated with the FTX Group — including FTX Trading, FTX US and Alameda Research — would be filing for bankruptcy under Chapter 11 in the District of Delaware. Sam Bankman-Fried resigned as CEO in the same announcement, but said “this doesn’t necessarily have to mean the end for the companies.”

Related: FTX US resigns from the Crypto Council for Innovation

As a $2-billion venture capital fund aimed at investments in Web3 projects, FTX Ventures backed projects including LayerZero Labs and purchased a 30% stake in SkyBridge Capital. In August, the firm reportedly absorbed the venture capital operations of Alameda Research amid the crypto bear market. Wu said at the time the two firms were still running at “arm’s length.”

‘Need to update my LinkedIn’ — FTX Ventures head resigns: Report

Amy Wu’s resignation followed the news 134 companies associated with the FTX Group would be filing for bankruptcy under Chapter 11 in the United States.

Amy Wu, an investor in FTX and the head of the firm’s venture capital arm, FTX Ventures, has reportedly resigned from her position.

According to a Nov. 11 report from The Information, Wu resigned as head of FTX Ventures following the announcement FTX would be moving forward with bankruptcy proceedings in the United States. According to her LinkedIn profile, Wu has been based at FTX Venture’s offices in The Bahamas since January.

FTX Ventures’ website, along with that of Alameda Research, went dark on Nov. 9 amid its parent company’s liquidity crisis and deal with Binance falling apart. Wu said on Twitter at the time that she was learning about events affecting the company at the same time as everyone else through social media and suggested she would update her LinkedIn profile for new job opportunities.

Wu’s resignation followed the news 134 companies associated with the FTX Group — including FTX Trading, FTX US and Alameda Research — would be filing for bankruptcy under Chapter 11 in the District of Delaware. Sam Bankman-Fried resigned as CEO in the same announcement, but said “this doesn’t necessarily have to mean the end for the companies.”

Related: FTX US resigns from the Crypto Council for Innovation

As a $2-billion venture capital fund aimed at investments in Web3 projects, FTX Ventures backed projects including LayerZero Labs and purchased a 30% stake in SkyBridge Capital. In August, the firm reportedly absorbed the venture capital operations of Alameda Research amid the crypto bear market. Wu said, at the time, that the two firms were still running at “arm’s length.”

FTX, FTX US and Alameda will file for Chapter 11 bankruptcy in US; SBF resigns

FTX CEO Sam Bankman-Fried has resigned from his position but will “remain to assist in an orderly transition” before being succeeded by John Ray.

Within a week, crypto exchange FTX has gone from proposing an acquisition by Binance to sort out its liquidity issues to proceeding with filing for bankruptcy under Chapter 11 in the District of Delaware.

In a Nov. 11 tweet, FTX said roughly 130 companies in FTX Group — including FTX Trading, FTX US, under West Realm Shires Services, and Alameda Research — had started proceedings to file for bankruptcy in the United States. FTX CEO Sam Bankman-Fried has also resigned from his position and will be succeeded by John Ray.

“The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders,” said Ray. “The FTX Group has valuable assets that can only be effectively administered in an organized, joint process.”

In a subsequent tweet, Bankman-Fried echoed his Nov. 10 apology, saying he was “really sorry” for the situation with FTX:

“Hopefully things can find a way to recover. Hopefully this can bring some amount of transparency, trust, and governance to them. Ultimately hopefully it can be better for customers.”

According to the filing, LedgerX, FTX Digital Markets — the group’s subsidiary in the Bahamas — FTX Australia and FTX Express Pay will not be parties to the bankruptcy proceedings. The announcement did not include details on a potential recovery plan for FTX investors. Many users have been attempting to withdraw tokens from the exchange amid reported liquidity issues, but FTX’s website said that it was unable to process withdrawals at the time of publication.

Related: FTX US announces it may halt trading on its platform in a few days

The collapse of a major crypto trading platform like FTX is the latest in a string of bankruptcy filings in 2022, from Voyager Digital to Celsius. Many global lawmakers have responded to the situation with FTX and others by suggesting additional regulations for crypto firms.

This article was updated to include a statement from Sam Bankman-Fried.