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BlockFi’s Zac Prince Unveils Bankruptcy Success And Future Ventures

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Zac Prince, a co-founder and previous CEO of the bankrupt crypto-lending entity BlockFi, has finally spoken after a critical moment for the cryptocurrency sector and made his next career step public. This publication acts like a ray of light and an illustration of patience in the fluctuating crypto business.

Prince’s update mainly praised the successful finalization of BlockFi’s bankruptcy proceedings. He pointed out his choice to remain silent as a tactical decision to smooth the bankruptcy process without public pressure. A remarkable accomplishment of this process is the full distribution of funds to BlockFi wallet account holders, a fact that is exceptional compared to other cryptocurrency bankruptcies.

BlockFi’s Positive Turn

The BlockFi saga moved into positive territory as the first distributions were initiated to the interest account holders. Prince suggested that those depositors could receive their full investments subject primarily to the proceeds from the estate of the troubled FTX trading platform. This fact places emphasis on the linked nature of the cryptocurrency industry and the reverberations of a failure of one platform on another.

The challenges that had been met, Prince looked back with a reflective gaze on what had happened with FTX, wishing for earlier detection of the fraud that had snared everyone in the industry, including BlockFi. His trial involvement in FTX’s Sam Bankman-Fried was spun like a step towards justice and responsible in the crypto industry.

In comparison, bankruptcy of BlockFi was considered highly efficient and cost-effective, particularly when compared with similar processes by other crypto companies including Celsius Network and Voyager Digital which also went bankrupt in the same year. BlockFi’s Bankruptcy being efficient has been a bright side that suggests a possible guideline on how to handle such crises within the crypto industry.

The furore over the FTX bankruptcy rages on, particularly with respect to the hefty legal fees being charged, as highlighted by Prince, prompting fears about the plight of the creditors. In the course of these thoughts, Prince disclosed his intention to take a new position, with the pronouncement scheduled for tomorrow, representing a substantial career shift after a turbulent period at platform.

Prince’s personal sacrifices for the platform, of giving up his recovery rights in order to increase the client recovery pool, and providing unpaid consultancy to the BlockFi Estate, are a demonstration of his commitment to the company’s stakeholders. Such steps have initiated his move to the new tasks, opening a new page in his career in the changing cryptocurrency world, which would definitely bring his expertise and thoughts to some new projects.

Extradition Tug-of-War: Terra Investors Advocate for Do Kwon’s U.S. Trial

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Terraform Labs co-founder Do Kwon is a matter of intense debate among investors in South Korea following the Terra-Luna financial failure. Investors prefer that Kwon face the US courts rather than being extradited to South Korea by Montenegro’s high court as was recently decided.

The Investor Community’s Statement shared through a public forum with more than 2,700 members, highlights their fear of Kwon getting away with light punishment if he were brought to trial in South Korea. They maintain that the U.S. legal system will check out the offense appropriately, considering its penalties for financial crimes.

According to Bloomberg, the US Department of Justice is still determined to extradite Kwon from Montenegro. Investors’ statement brings out the difference in sentencing between the two nations, indicating that for Korea, financial crime attracts 30-40 years maximum, while in the USA, counts of each crime can be stacked up consecutively.

Sam Bankman-Fried, the former head of the now-defunct FTX exchange, convicted for defrauding investors, was suggested to be given a hundred years imprisonment which clearly showed this variation.

Pursuing Justice: Terra-Luna Investors’ Plea

The Terra-Luna investors’ plea stems from the fear of unfairness; they are afraid that a mild sentence for Kwon in South Korea means they will have to deal with their financial losses for a long time. They want Kwon to stand trial as if it were the culmination of the financial crisis that resulted from the fall of Terraform Labs’ cryptocurrencies in May 2022.

A loss of over $40 billion in market value occurred as a result of the sudden collapse of Terra’s algorithmic stablecoin and its sister cryptocurrency, Luna, which has prompted calls for responsibility. Kwon and Terraform Labs are being pursued by both US and South Korean regulators who have accused them of fraud and securities law breaches.

The legal battle for Kwon’s extradition is still ongoing, and the entire world is waiting to see what will happen next in this saga of financial crime and quest for justice. The Terra-Luna investor community has a strong position that only through a U.S. trial will the scales of justice be equitably balanced so that victims are not cheated, as these are new financial collapses.

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Ex-FTX CEO Recommends 6 1/2-Year Maximum Term in Legal Filing

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Sam Bankman-Fried’s attorneys informed a U.S. judge on Tuesday that the FTX founder’s conviction for stealing $8 billion from users of the defunct cryptocurrency exchange would be worthy of a sentence of 63 to 78 months.

The plea was submitted to U.S. District Judge Lewis Kaplan, who is scheduled to sentence Bankman-Fried in Manhattan federal court on March 28, by the attorneys for the imprisoned former billionaire, who turns 32 next week. A jury found Bankman-convicted Fried guilty in November of seven counts of fraud and conspiracy; he now faces a maximum sentence of 110 years in jail.

Ex-FTX CEO Advocates 6 1/2-Year Max Term

The proposal is made in the context of encouraging developments regarding the insolvency of the problematic exchange he previously oversaw. The attorneys for SBF claim that the recovery of the cryptocurrency markets and the strong returns on certain of the estate’s investments may make it possible to fully compensate clients who lost out on the company’s failure. Given the importance of taking the victims’ impact into account, this factor could have a big impact on the sentence. The attorney for SBF also wrote,

“When the factors are considered, including Sam’s charitable works and demonstrated commitment to others, a sentence that returns Sam promptly to a productive role in society would be sufficient, but not greater than necessary, to comply with the purposes of sentencing.”

In a comprehensive 98-page document submitted to US District Judge Lewis A. Kaplan ahead of the March 28 hearing, SBF’s legal team outlines arguments advocating for a merciful sentence. They emphasize SBF’s philanthropic efforts and dedication to others, proposing that a sentence facilitating his swift reintegration into society would serve the justice system’s goals. The defense also opposes ordering SBF to forfeit assets, asserting that none of the identified accounts intended for forfeiture directly benefited him. Moreover, they stress the forthcoming restitution of funds to clients and creditors via FTX’s bankruptcy proceedings, further diminishing the need for additional punitive measures.

For three days, Bankman-Fried gave testimony. He admitted to mistakes, such as failing to establish a risk-management team, but he denied stealing anything and claimed to have been unaware of Alameda’s debt to FTX until just before both companies folded. Three former FTX technology head Gary Wang, former Alameda chief executive Caroline Ellison, and former engineering chief Nishad Singh, who testified against him, all entered guilty pleas as part of agreements with prosecutors. They haven’t received a sentence yet.

In spite of a potential conflict of interest, Bankman-Fried expressed his desire to continue working with the new attorneys he hired to represent him during his sentence when he appeared in court last week for the first time since his conviction.

By March 15, the Manhattan U.S. Attorney’s office is anticipated to release its own recommendation for punishment. It is anticipated that Bankman-Fried would challenge his verdict and punishment.

FTX Crash Triggers Criminal Probe Of Prominent Crypto Hedge Fund Tyr Capital

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A Swiss prosecutor has initiated a criminal investigation against Tyr Capital for allegedly mishandling its exposure towards FTX, a failed cryptocurrency exchange. The case emanates from the lawsuit that TGT—an investor in Tyr’s fund—filed against it in the Cayman Islands, where Tyr is domiciled. The lawsuit by TGT alleges Beginners contravened internal risk limits and ignored warnings about FTX exchange.

TGT is trying to liquidate Tyr’s fund and recover its remaining assets, including a $22 million claim against FTX; TGT invests through Yield App, among other companies that pool capital into the crypto market. According to TGT, Tyr tried to take out its money from FTX on the day of bankruptcy, and afterward, it lost much value.

Tyr, founded by former Deutsche Bank and Société Générale traders Edouard Hindi and Olivier Trombert, has denied all accusations while stressing that it has always been acting in the best interests of its investors. The company Tyr, which owns close to $140m assets under its management, is among the few profitable cryptocurrency hedge funds that have managed to exploit arbitrage opportunities available in this highly volatile market.

Before FTX shut down, Tyr spoke with its founder, Sam Bankman-Fried, about concerns it had over bankruptcy and liquidity of the exchange, adding that they tried to get their money out as soon as possible. According to Tyr, they have completely collaborated with Swiss regulators and will be exonerated.

Last year in April, TGT also filed a criminal accusation against Tyr with the prosecutor in Geneva, underlining “the crime of the criminal management.” It was alleged that there should be a dawn raid on Tyr’s offices. The person familiar with the matter said that on August 17 last year, searches were conducted by the prosecutor, and documents were seized.

FTX Customers Await Compensation

FTX, which was once the largest cryptocurrency exchange, filed for bankruptcy in November 2022 after suffering from considerable damages during the market crash and being repeatedly attacked by hackers. FTX’s clients like Tyr will be refunded depending on the value of their investments at the time of its collapse when bitcoin and ether had lost more than half of their then-present values.

Since then, FTX’s administrators have decided not to restore the exchange because it is not legally possible or technically difficult. Because of this failure, Bankman-Fried, who also founded another crypto exchange called FTX.com, apologized for the collapse of FTX and stated his readiness to offer help to affected customers in any way he could.

The recent cases of Tyr and FTX illustrate that the crypto industry is still largely unregulated with its inherent risks and challenges, such as volatility and fraud. The sector’s expansion has necessitated greater openness on the part of cryptocurrency exchanges and fund management companies, which have caught the attention of investors, including oversight agencies.

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FTX Hacked: SIM-Swappers Nabbed For $400M Crypto Heist

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In a significant breakthrough, law enforcement authorities have charged three individuals in connection with a sophisticated SIM-swapping scam that drained over $400 million from FTX, leading the cryptocurrency exchange to the brink of bankruptcy. The hackers took advantage of FTX’s weak security and the turmoil caused by its founder’s resignation and fraud conviction, according to Bloomberg.

FTX, once valued at $32 billion, filed for bankruptcy on Nov. 11, 2022, after its CEO, Sam Bankman-Fried, was found guilty of multiple charges of fraud and money laundering. He stepped down from his position and faced a long prison sentence. That same night, FTX’s crypto wallets were emptied by hackers who transferred the funds to various decentralized exchanges.

Bankman-Fried claimed he had nothing to do with the hack and suggested it might have been an inside job. However, the Department of Justice (DOJ) revealed that the culprits were actually a SIM-swapping crew that had been targeting FTX and other victims for two years.

FTX Targeted In $400M SIM-Swapping

SIM-swapping is a technique that involves tricking or bribing telecom employees to switch the phone number of a target to a device controlled by the hacker. This allows the hacker to intercept text messages and phone calls, including those that contain authentication codes or password reset links. With these codes, the hacker can access the target’s online accounts, such as email, social media, banking, and crypto wallets.

As per the Department of Justice (DOJ), Robert Powell from Illinois, Emily Hernandez from Colorado, and Carter Rohn from Indiana have been charged with orchestrating a series of SIM swap attacks. They used fake IDs, personal data, and online aliases to impersonate their victims and convince the phone companies to port their numbers. They also used VPNs and encrypted messaging apps to communicate and coordinate their attacks.

The indictment, filed in a federal court in Washington, does not mention FTX by name, but refers to it as “victim company-1”. Two sources confirmed to the media that FTX was indeed the target of the $400 million heist. The indictment also lists about 50 other individuals who were victimized by the SIM-swapping gang.

The FTX hack

On November 11, 2022, the FTX hack transpired when Hernandez used fake ID containing the details of an FTX employee to convince AT&T to transfer the employee’s phone number to a SIM card under her possession. Powell, identified as the leader of the group and known online as ‘R$’ and ElSwapo1, subsequently utilized the employee’s phone number to obtain authentication codes, enabling access to FTX’s cryptocurrency wallets.

Subsequently, the hackers transferred the pilfered funds to various decentralized exchanges, including Uniswap and SushiSwap, facilitating the conversion into alternative cryptocurrencies or cash. In an attempt to obfuscate their trail, the hackers resorted to mixers and tumblers, services designed to obscure the origin and destination of cryptocurrency transactions

As per the DOJ, a SIM-swapping gang absconded with over $400 million from FTX. However, certain reports indicate that the figure might have reached as high as $1 billion. Pinpointing the precise amount proves challenging due to the constant fluctuations in the value of cryptocurrencies.

The DOJ charged Hernandez, Powell, and Rohn with fraud and identity theft, and they face up to 20 years in prison if convicted. Powell’s lawyer, Gal Pissetzky, declined to comment on the case, while Hernandez and Rohn could not be reached. The DOJ also said that the investigation is ongoing and that more arrests and charges may follow.

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FTX Plans To Repay Customers In Full, Drop Exchange Relaunch

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The bankrupt crypto exchange FTX has given up on its plan to relaunch or sell its platform, citing high costs and risks. Instead, the company is focusing on repaying all of its customers and creditors who can prove their losses, according to Bloomberg.

FTX filed for bankruptcy in late 2022 after its founder, Sam Bankman-Fried, shut down the exchange and handed over control to insolvency experts. The company faced a complex web of debt and claims from various parties, including customers who deposited cash and crypto on the platform.

Since then, the company has been working to track down and liquidate its assets, including selling off some of its crypto holdings. As a result, FTX’s four largest affiliates have increased the group’s cash pile from about $2.3 billion in late October 2023 to $4.4 billion at the end of the year, according to court documents.

The company’s lawyer, Andrew Dietderich, told US Bankruptcy Judge John Dorsey on Wednesday that FTX’s objective is to repay all of its customers and creditors in full as long as they can verify their claims. He said that this is not a guarantee but a realistic goal that the company has a strategy to achieve.

“I would like the court and stakeholders to understand this not as a guarantee, but as an objective, […] there is still a great amount of work, and risk, between us and that result. But we believe the objective is within reach and we have a strategy to achieve it, said Dietderich.

FTX Bankruptcy: Claim Validation Process

However, he also said that there are millions of claims that need to be examined and validated and that some of them may not be legitimate. He asked the court to approve a process to determine the size and validity of each claim.

Judge Dorsey agreed to the proposed process and ruled that the claims would be based on what the customers and creditors were owed on the date FTX filed for bankruptcy, as per bankruptcy rules. He rejected the complaints of some customers who wanted their claims to reflect the current prices of digital assets, which have risen since late 2022.

FTX’s future remains uncertain, as the company has abandoned its previous plan to restart or sell its exchange. Dietderich said that the company ran an exhaustive process to find potential investors, but none of them were willing to put up the cash needed to revive the exchange.

He blamed Bankman-Fried for leaving the exchange in a “dumpster” and creating a lot of costs and risks for anyone who would try to restore it. Bankman-Fried, who is also the founder and CEO of another crypto exchange, FTX.US, has not commented publicly on the bankruptcy case.

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FTX Boosts Cash Reserves By Selling Crypto Assets Amid Bankruptcy

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FTX, the crypto firm embroiled in fraud allegations, has been increasing its cash reserves by selling some of its crypto assets, according to Bloomberg. The company filed for Chapter 11 bankruptcy in November 2022 and is looking for ways to repay its customers and potentially resume its exchange operations.

The company’s four largest affiliates, including FTX Trading Ltd. and Alameda Research LLC, reported a combined cash balance of $4.4 billion at the end of 2023, up from $2.3 billion in late October, according to monthly operating reports. The total cash amount may be higher as not all affiliates have filed their reports.

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Source: Bloomberg

FTX said in a court document last month that it raised $1.8 billion by selling some of its digital assets through Dec. 8. It also said it was conducting Bitcoin derivative trades to hedge its exposure to the cryptocurrency and generate additional income from its digital holdings. Moreover, it said it was exploring options to restart the exchange, which has been frozen since the bankruptcy filing.

FTX Faces Lawsuits And Customer Claims

FTX’s bankruptcy filing came after several regulators and investors accused the company of fraud, market manipulation, and money laundering. The company’s founder and CEO, Sam Bankman-Fried, denied the allegations and said he cooperated with the authorities.

Since the bankruptcy filing, FTX’s advisers have been working to recover assets and strike deals with customers with smaller accounts on the platform. The company has also sued former associates of Bankman-Fried and other crypto firms, such as Bybit Fintech Ltd., that withdrew funds from FTX before the bankruptcy.

However, FTX has warned that it does not expect to fully repay its customers, who have filed claims worth billions of dollars. The company has proposed to value the customers’ digital assets at the time of the bankruptcy filing, meaning they would miss out on the gains from the Bitcoin rally and other tokens in the past year. This proposal has been challenged by dozens of customers, who argue that it is unfair and violates the bankruptcy code.

The value of customer claims has risen along with FTX’s cash reserves. According to Cherokee Acquisition, an investment firm and bankruptcy claims broker, customer claims worth more than $1 million traded at around 73 cents on the dollar as of Friday, up from 38 cents in October. The firm said that the actual trading prices may vary depending on the specific claim and other factors.

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FTX Trading Faces Swift Probe After Judge Sets Tight Limits On Bankruptcy Investigation

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A new outside investigation of FTX Trading, the crypto firm that collapsed in 2022 after a massive fraud, should be fast and focused, according to a federal judge. The judge said he wanted to avoid disrupting the company’s insolvency case with another costly and lengthy probe, according to Bloomberg.

The investigation was ordered by a federal appeals court in Philadelphia earlier this month following a request by the Office of the US Trustee, the federal watchdog that oversees corporate bankruptcies. The court said an examiner should be appointed for the Chapter 11 case of FTX Trading but left the details of the probe to US Bankruptcy Judge John Dorsey.

Judge Sets Limits For Examiner

Dorsey, who is presiding over the bankruptcy case in Wilmington, Delaware, sided with the lawyers of FTX Trading and its creditors, who argued that the investigation should be short and limited in scope. They said that the company and its creditors had already conducted extensive investigations into the company’s downfall and the recovery of its assets.

Dorsey agreed that a wide-ranging investigation would waste time and money. He said it might cost tens of millions without uncovering anything new. Instead, he suggested the examiner review the company’s previous investigations and external probes by regulators and prosecutors. Additionally, he emphasized checking for conflicts of interest with FTX Trading’s lawyers.

Dorsey said that the whole process should take no more than 45 days and result in a report by the examiner summarizing the findings. He said that he would work with the attorneys of the company, its creditors, and the US Trustee to finalize a formal proposal to appoint an examiner in the coming weeks.

FTX Trading’s Fraud And Collapse

FTX Trading was a crypto firm that offered a platform for trading digital assets. It was founded by Sam Bankman-Fried, who was later convicted of running a fraudulent scheme that misused the assets of the customers. He stepped down from the company in 2022 and was sentenced to prison.

The company filed for bankruptcy in 2022 and was taken over by restructuring advisers, who have been pursuing billions of dollars in cash and digital assets that were lost or stolen by the fraud. The company has also been facing lawsuits and investigations by various parties, including customers, creditors, regulators, and prosecutors.

The company is planning to ask its creditors to vote on a plan to distribute the money it has recovered in the next few months. The plan will also determine the fate of the company and its remaining assets.

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Buterin’s Bold Vision For Crypto Legitimacy And Governance

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Ethereum founder Vitalik Buterin, a prominent leader in the crypto space, has recently shared some controversial opinions on the importance of public legitimacy for crypto companies. He cites two recent crises as examples of how ignoring public legitimacy can lead to serious consequences.

The first crisis involved Sam Bankman-Fried, the CEO of FTX, a leading crypto exchange. Bankman-Fried was accused of manipulating the price of Solana, a blockchain platform with which he is closely associated. He allegedly used his influence and resources to artificially inflate the demand and supply of Solana tokens, resulting in a huge price spike.

The second crisis concerned the OpenAI board, a nonprofit research organization dedicated to creating artificial intelligence that can benefit humanity. The board announced that it had appointed a new CEO, Sam Altman, without any prior consultation or explanation to the public. Altman is a controversial figure criticized for his views on wealth inequality, democracy, and biotechnology.

Buterin argues that the main problem in both cases was not the actions themselves but the lack of transparency and accountability to the public. He says that Bankman-Fried and the OpenAI board failed to respect the principle of public legitimacy, which he defines as “the extent to which the public agrees that an actor or institution has the right to wield power over some domain.”

Buterin’s Vision For Crypto Governance

Buterin believes public legitimacy is essential for the crypto industry, often seen as a disruptive and revolutionary force worldwide. He says that crypto companies should follow the legal rules, engage with their communities and stakeholders, and explain their decisions and actions to the public.

He says that companies should adopt a governance model that balances the needs of efficiency, innovation, and legitimacy. He suggests that companies should have governing boards that are diverse, representative, and accountable. He also advocates for more participation and feedback from the public, such as through voting, surveys, and forums.

Buterin acknowledges that his vision may seem idealistic and that some followers may disagree. He says that he is open to debate and criticism and that he welcomes different perspectives on the issue of crypto governance. He hopes his views can spark a constructive dialogue within the crypto community, ultimately leading to a more trustworthy and legitimate crypto industry.

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Bitcoin Spot Market Flaws Threaten Investor Protection: ProShares Strategist

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The Bitcoin spot market, where the cryptocurrency is traded for immediate delivery, still suffers from some flaws, such as price inconsistency and platform vulnerability, according to Simeon Hyman, a global investment strategist at ProShares.

Hyman made his remarks on Bloomberg TV on Wednesday, contrasting the Bitcoin spot market with the Bitcoin futures market, where the cryptocurrency is traded for delivery at a later date. He said that while the futures market relies on a blend of prices from different sources for daily settlement, the spot market has multiple prices depending on the exchange.

He also questioned how the cash creation and redemption process would work for a spot Bitcoin exchange-traded fund (ETF), allowing investors to gain exposure to the cryptocurrency without holding it directly. Unlike most ETFs, which use the in-kind mechanism where broker-dealers exchange the underlying asset with the issuer, a spot Bitcoin ETF would use cash instead.

Hyman praised the BTC futures market as a “mature and liquid and regulated place”, but described the spot market as “still a little, let’s call it, weird”. He mentioned some of the leading crypto exchanges, such as FTX and Binance, as well as the “shaggy hair guy in the news”, referring to Sam Bankman-Fried, the CEO of FTX.

Bitcoin Price Movement

Bitcoin, the world’s largest digital asset by market capitalization, dropped 2.96% on Thursday to $$43,263, reversing its earlier gains. The price movement was influenced by the anticipation of the SEC’s verdict on the spot Bitcoin ETFs, as well as other factors such as regulatory developments, institutional adoption, and market sentiment.

BTC is making a bearish pennant pattern, indicating further down in price in the coming days. BTC crossed the $45000 price level in the last few days after a long period of 21 months. Despite the fluctuations, many analysts and investors remain bullish on the long-term prospects of BTC in 2024.

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Bitcoin Spot Market Flaws Threaten Investor Protection: ProShares Strategist 3

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