Encrypted winter gets colder just days into the new year

Less than a week into the new year, the crypto winter has cooled further, with hundreds of jobs lost and an ongoing bear market combined to undermine investor confidence. And there are no signs that the cryptocurrency turmoil will end anytime soon.

Bankman-Fried Seeks to Hold $450 Million Robinhood Stake

Every time the story of FTX comes to an end, another harrowing chapter unfolds. This week, the former CEO’s Bankman-Fried pleaded not guilty to fraud charges, resulting in his October 2 court date set later this year. Bankman-Fried demanded that he retain control of his 56 million shares in consumer trading app Robinhood, worth about $450 million at current prices, to cover defense costs.

In a challenge filed in bankruptcy court Thursday against the FTX debtor’s claim, Bankman-Fried argued that the debtor’s request to get Robinhood’s money should be denied. Eligible for this form of relief. “

Bankman-Fried isn’t the only one who wants control of Robinhood’s assets. Because several parties, including his now bankrupt BlockFi, also want their remaining meager assets to settle their claims against FTX. In its bankruptcy filing on Dec. 22, 2022, FTX said that due to the sheer number of creditors seeking ownership of its shares, it said, “Until this court can resolve the matter in a manner that is fair to all creditors. Assets should be frozen.” debtor. “

Hundreds of jobs cut

Meanwhile, many cryptocurrency companies are laying off staff in response to the turmoil surrounding FTX. Crypto lender Genesis considers bankruptcy after cutting his 30% of staff in a second round of layoffs in recent weeks and losing his $175 million locked in FTX trading accounts doing. Genesis also owes $900 million to crypto exchange Gemini, which has criticized how Genesis is handling the bankruptcy crisis.

Californian crypto-focused bank Silvergate Capital Corp. laid off 40% of its workforce after investors rushed to liquidate $8.1 billion in banks following the collapse of crypto exchange FTX Did. The collapse affected Silvergate as it held deposits in his FTX unit and Alameda Research, the trading company behind FTX.

Reflecting industry trends to cut costs, China-based cryptocurrency exchange Huobi said it plans to cut about 20% of its workforce. “In the current state of the bear market, we will continue to have a very lean team,” Huobi said in a statement.

Regulators Warn Banks of Crypto Risks

In addition to job losses, a U.S. court has ruled that bankrupt cryptocurrency firm Celsius can retain all of its customers’ cryptocurrency deposits.

In light of this ruling, investors now have a better understanding of why cryptocurrency experts advocate the “not your key, not your cryptocurrency” notion. This basically means that investors cannot be sure that their crypto holdings are protected unless they store them in a wallet. Owned and controlled by themselves.

Several federal regulators have further warned banks to be aware of the risks associated with cryptocurrency assets, including legal uncertainties and misleading disclosures. The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the U.S. Office of the Comptroller of the Currency have said in a joint statement for the first time that they will monitor banks’ exposure to crypto assets.

Conclusion

The crypto market is in a tough spot with no prospect of a bailout. The current layoffs appear to be a spillover from his late 2022 announcement that Coinbase would lay off his 18% of its workforce.

A deep freeze gripping global crypto markets continues as the value of most major cryptocurrencies remains either down or flat compared to last week, with bitcoin trading around $16,850 at noon on Friday, New York time. I’m here.