Cryptogpt News, Dec 5: Top Democrat faces backlash for tweeting SBF

Some are accusing Maxine Waters of being too friendly with the founder of FTX during her efforts to get him to testify in Congress.

SBF commits to testifying before Congress after FTX collapses… but doesn’t say when

“Once I learn and review what happened, I will feel it is my duty to appear before the committee and explain,” he tweeted.

Sam Bankman Freud has said he will testify before Congress and answer questions about ending FTX.

The chairwoman of the US House Committee on Financial Services, Rep. Maxine Waters tweeted Friday that she appreciates that the embattled entrepreneur was “candid” in his discussions about the exchange’s demise. He added:

“Your willingness to speak publicly will help the company’s customers, investors and others. To that end, we welcome your participation at our hearing on the 13th.”

Late Sunday night, SBF responded by saying:

“Once I learn and review what happened, I will feel it is my duty to appear before the committee and explain. I’m not sure that will happen by the 13th. But when it does It will be, I will testify.”

You could argue that it’s a bit of an interesting take on the 30-year-old. The tweet suggests he still hasn’t gotten to the bottom of what caused FTX to explode so spectacularly last month — but that hasn’t stopped him from giving several high-profile interviews over the past week, including To New York. The Times, The Wall Street Journal and Good Morning America.

Some on Twitter have accused Rap Waters of being overly friendly with SBF – reposting photos that show the pair arm-in-arm smiling for the camera.

And others asked why Rep. Waters took such a condescending tone in inviting the founder of FTX to appear before the committee when he has the authority to do so.

All of this comes as other heavyweights in the crypto sector—Coinbase CEO Brian Armstrong among them—challenge the narrative that SBF has created in recent interviews. Over the weekend, he tweeted:

“I don’t care how messed up your accounting is (or how rich you are)—if you’ve got an extra $8 billion to spend, you’re sure to see that. Accounting error. This Stolen is customer money used in his hedge fund, plain and simple.”

Elsewhere, the Financial Times reported that Genesis owed $900 million to customers of Gemini, the exchange run by the Winklevoss twins, after it “got off on the wrong foot” following the collapse of FTX.

Genesis was serving as the lead partner of Gemini’s Earn program that enables retail investors to earn interest on their crypto savings.

Further reporting from Coin Desk indicates that the financial hole that needs to be plugged is much larger than that — and totals $1.8 billion.

FTX plans to resume returns to Japan.

Purchased by FTX with Japanese regulatory licenses, FTX Japan announced that its customers’ funds are safe and separate, and will be returned soon.

FTX Japan has announced plans to resume returns in “short order” – marking the second firm in Sam Bankman-Fried’s imposed crypto empire to avoid bankruptcy.

Formerly known as Liquid, the Japanese derivatives exchange was already heavily regulated by Japan’s Financial Services Agency (FSA) when FTX acquired it in February.

As a result, his funds apparently had nothing to do with Bankman Freud’s trading firm, Alameda Research.

Between that and how its assets are held under Japanese law, the firm said it was “able to confirm with the law firm representing FTX Group in the Chapter 11 bankruptcy proceedings.” that Japanese customer cash and cryptocurrency should not be part of the process”. .

It added that FTX Japan users’ assets were held in offline cold wallets, and private keys were “only under the control of the Japan operations team.”

The FSA ordered it to stop accepting deposits and freeze all withdrawals – including from other parts of FTX – on November 10, shortly after FTX ordered them “without clearly explaining the reasons to investors” across the company. I stopped, said the FSA.

It added, “This was to prevent a situation in which the interests of creditors and investors would be harmed by the transfer of the company to the associated companies.”

‘Regulation Works’

FTX Japan is the second firm in the FTX Group — which includes FTX, FTX US, Alameda Research and about 130 other smaller companies — to emerge from the biggest crypto crash with its customers’ funds apparently intact.

The other is FTXUS Derivatives, a derivatives exchange for the company’s US customers. Like FTX Japan, it was a concern when Bankman-Fried’s company bought it, and was fully regulated by the Commodity Futures Trading Commission (CFTC).

As a result, it was “walled off” from the rest of FTX and its funds were not touched by Alameda, CFTC Chairman Ruston Behnam told a Senate hearing this week, citing evidence that the crypto Regulations work.

As for FTX Japan, the firm has said its main goal is to work with the FSA and FTX’s lawyers to reactivate the withdrawal. With the US legal team, it intends to do so as soon as possible.

A war of words and a ‘Much Wow’ superyacht: Insolvent 3AC founders clash with liquidators

The liquidators of a bankrupt crypto hedge fund say Kyle Davis and Zhu Xu have repeatedly failed to join the proceedings – but they insist that’s not the case.

New court documents show that it is much easier to recover the $3 billion owed to creditors after the collapse of Three Arrow Capital.

Liquidators have made only modest progress since the doomed hedge fund collapsed earlier this year, a presentation showed.

After “forced disinvestment”, $2.8 million has been recovered, along with about $35 million in fiat that was held in Singapore banks.

What’s more, about 60 different types of cryptocurrencies have been identified and seized — but their exact value is unclear.

One particularly interesting development concerns efforts to recover $30 million from the sale of a superyacht named “Much Wow”—apparently named in tribute to Dodge, the monumental Shiba Inu that led to Dogecoin was created.

The presentation also criticized 3AC’s founders, Kyle Davies and Zhu Su, for failing to respond to communications from the liquidators – despite the fact that they are active on Twitter, and have posted a number of high profile posts. Profile has also given media interviews.

It notes that Bloomberg was granted an “extensive interview” after 3AC came under fire in July – CNBC last month with Davis to discuss the hedge fund’s bankruptcy proceedings as well as the turmoil surrounding FTX. appeared on

So far, the two men have had just two conversations with liquidators. He was present for an introductory Zoom call in July where “his video was turned off and he was completely silent.” He also participated in separate teleconferences in August.

All this means the liquidators are yet to receive a full set of records relating to 3AC’s finances, the presentation claimed, adding:

“A communication protocol was agreed between the liquidators and the founders but satisfactory cooperation has not yet been achieved. The founders have refused to accept service through their Singapore counsel. The founders are in Bali, Indonesia and/or the United appear in the United Arab Emirates — a jurisdiction known for its difficulties in enforcing foreign court orders.”

3AC’s co-founders back off.

Kyle Davies has hit back at the liquidators – accusing them of making “extraordinary allegations” against him and Zhu Su.

In a statement, they allege that the liquidators have failed to engage constructively “to try to maximize profits for creditors”:

“Instead, we feel that they are intent on making threats against us, and are spending a lot of time and money on continuing court proceedings in many jurisdictions … in our view, at times like these. and costs should be incurred in engaging us in the best interests of the creditors.”

The statement claims the liquidators have been unable to distribute funds to creditors despite “sitting on cash and other fund assets” for months.

“We invite the liquidators to engage us in a positive, constructive and non-threatening manner […] We are actively working to arrange a round table discussion with the creditors to discuss the recovery of assets and the way forward.”

Bitcoin ‘On The Way To Irrelevance,’ European Central Bank Blog Announces

The authors say bitcoin transactions are “cumbersome, slow and expensive” due to technical flaws – and are not used for legitimate real-world payments.

A blog post from the European Central Bank warned that bitcoin is “on the path to irrelevance” and is rarely used for legal transactions.

In an opinion piece, the authors point out how the world’s largest cryptocurrency has fallen from $69,000 to $17,000 over the past year — writing:

“For bitcoin supporters, the apparent stability signals a breather on the way to new highs. However, more likely, it’s an artificially induced last gasp before a path to irrelevance — And that could have been predicted before the FTX broke and sent Bitcoin’s price down to $16,000.”

Ulrich Bindseil and Jürgen Schaaf said a flurry of technical glitches meant bitcoin transactions were “cumbersome, slow and expensive” — and because of that, the digital asset “will never be a match for legitimate real-world transactions.” Not used to a great extent.”

Some Bitcoiners will bite back at this point, arguing that it is better understood as a store of value. But the authors also question this narrative – holding it isn’t suitable as an investment because it doesn’t generate cash flow like real estate, or returns like equity. In his view, BTC is purely speculative.

“Speculative bubbles depend on new money coming in. Bitcoin has also repeatedly benefited from waves of new investors.”

Bindseil and Schaaf add that “big bitcoin investors have the strongest incentives to keep the excitement going” — funding wheel lobbyists to win round lawmakers and regulators.

He explained that while the European Union has unveiled a “comprehensive regulatory package” called MICA, “Congress and federal officials in the United States have not yet been able to agree on coherent rules.”

And the authors claim that regulation is currently clouded by “misconceptions” – and blockchain technology has “so far produced limited value for society, no matter how great the expectations are for the future. “

Inevitably, talk then turned to Bitcoin’s environmental impact – a debate that is often quickly rebuked by enthusiasts. Describing this cryptocurrency’s blockchain as an “unprecedented contamination,” the authors argued:

“It consumes energy on the scale of entire economies. Bitcoin mining is estimated to use more electricity per year than Austria. Second, it creates mountains of hardware waste. One Bitcoin transaction is equivalent to two smartphones. uses hardware versus hardware. The entire Bitcoin system produces as much e-waste as the entire Netherlands. This inefficiency of the system is not a flaw but a feature. It is one of the features that guarantee the integrity of a fully decentralized system is one of.”

Concluding their arguments, Bindseil and Schaaf said that Bitcoin should not be legalized because it “seems neither suitable as a payment system nor as a form of investment.”

He cautioned the financial industry against promoting BTC investments — despite the short-term profit potential.

“The negative impact on customer relationships and reputational damage to the entire industry could be enormous when Bitcoin investors suffer further losses.”

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