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FTX’s Bankruptcy Plan Faces Final Approval After Fraud Conviction

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FTX Trading Ltd., the crypto exchange that was once one of the largest and most popular platforms in the industry, is nearing the end of its bankruptcy case after its founder and CEO, Sam Bankman-Fried, was sentenced on planing huge fraud that led the FTX bankruptcy, Bloomberg reported on Dec 18th.

The bankrupt exchange, which filed for Chapter 11 protection last year, has proposed a reorganization plan that aims to pay back billions of dollars to its customers and creditors, who have been waiting for months for a resolution.

The plan, which was unveiled on Monday, outlines how FTX will distribute its remaining assets and liabilities among its stakeholders. According to the plan, the exchange will liquidate most of its crypto holdings and use the proceeds to pay off some of its debts.

The plan still needs to be approved by the creditors and by US Bankruptcy Judge John Dorsey, who will review it for any errors or omissions. The creditors have until next year to vote on the plan, with some changes likely to be made before then.

The major creditor and customer groups that have been involved in the case have agreed to support the broad outlines of the plan, but some details remain unclear or controversial.

FTX’s Deceptive Rise To Prominence

FTX was founded in 2019 by Bankman-Fried, a former hedge fund manager who envisioned creating a decentralized platform for trading cryptocurrencies. The exchange quickly gained popularity among traders and investors looking for high returns and low fees.

However, behind the scenes, FTX was involved in a massive fraud scheme that involved manipulating prices, inflating volumes, and hiding losses. An anonymous whistleblower exposed the scheme in October 2022, revealing that the exchange had been using fake accounts and bots to create artificial demand and supply for certain tokens.

The revelation triggered a massive sell-off that wiped out billions of dollars from FTX’s market value. Customers who had deposited cash or crypto on FTX lost most or all of their funds. The SEC investigated FTX’s activities and filed charges against Bankman-Fried and several other executives.

Bankman-Fried agreed to surrender control of his company to restructuring professionals in November 2022. He pleaded guilty to multiple fraud and money laundering counts in December 2022. He faces up to 20 years in prison for his crimes.

Related Reading | Crypto Market Recap: Bitcoin & ETH Face Decline as Altcoins Shine Bright

Solana (SOL) Bulls Gain Momentum: Analyst Envisions a 600% Surge, Eyeing $453 Price Level

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Solana (SOL) experienced a 5.1% surge in the last 24 hours and a 9% increase over the preceding week. Additionally, its monthly charts show a remarkable ascent of over 58%. In 2023, SOL has positioned itself as one of the top-performing cryptocurrencies, achieving a staggering surge of more than 530% since January. This notable performance has outshone Bitcoin (BTC), which has seen a comparatively modest increase of around 164% during the same period.

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Solana (SOL) Bulls Gain Momentum: Analyst Envisions a 600% Surge, Eyeing $453 Price Level 2

Furthermore, Solana’s (SOL) Total Value Locked (TVL) has surpassed the $655 million milestone, marking a substantial 211% surge since January. Despite these impressive gains, the ongoing rally for SOL may still have room to continue.

Solana Target Set: Analysts Predict a Bullish Surge, Aiming for $453

Cryptocurrency analyst InvestAnswers suggests that during the next bull run, SOL has the potential to achieve 10% of Ethereum’s (ETH) market capitalization. If ETH reaches $8,000, SOL might see an approximate value of $231, marking a substantial 266% increase from its current levels. Alternatively, InvestAnswers offers a more optimistic scenario where Solana (SOL) could reach 20% of ETH’s market cap, propelling SOL’s price to $453.

This more bullish projection implies a remarkable 615% surge from its present value. Notably, other analysts share this optimism for SOL. ARK Invest CEO Cathie Wood has expressed support for the altcoin, and even OpenAI’s AI chatbot, ChatGPT, has forecasted a bullish future for SOL, predicting a $500 valuation by 2024. Investment firm VanEck also paints a positive picture for Solana (SOL), projecting a potential price of $3,211.28 by 2030.

It is worth noting that SOL rebounded impressively in 2023 following its significant decline in November 2022, triggered by the collapse of FTX. FTX founder Sam Bankman-Fried, an early SOL supporter, played a pivotal role as one of the token’s major holders through his exchange.

Solana Thrives Despite Challenges: Co-founder Addresses FTX Collapse

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Solana’s native token SOL has emerged as one of the standout performers of the year, defying the odds and experiencing a remarkable surge of over 500%. This success is particularly noteworthy considering the challenges the blockchain faced, including its close association with FTX and multiple outages in 2022. However, according to Anatoly Yakovenko, co-founder of Solana, these hurdles have played a role in fortifying the platform.

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Yakovenko Clarifies Solana SOL’s Security Status

In an insightful episode of the Unchained podcast, Yakovenko delves into the aftermath of FTX’s collapse, shedding light on how it affected SOL. FTX, a major supporter of the platform, held substantial amounts of SOL, making its collapse a significant event for It. Despite this, Yakovenko suggests that the discipline imposed by FTX’s downfall, coupled with technological enhancements, has ultimately strengthened Solana.

During the interview, Yakovenko also shared his early impressions of Sam Bankman-Fried, highlighting the intricate dynamics within the cryptocurrency space. Addressing regulatory concerns, particularly the SEC’s designation of SOL as a security, Yakovenko clarified that the accusation was aimed directly at the exchange and did not implicate Solana Labs, the foundation, or himself. He emphasized that the current situation may require Congress’s intervention for resolution.

Another aspect covered in the discussion was the entrepreneurial exodus from the U.S. due to regulatory risks. Yakovenko expressed concerns about how regulatory uncertainties are prompting entrepreneurs to seek more favorable environments, impacting the cryptocurrency landscape.

Intriguingly, Yakovenko touched upon Solana’s share of the stablecoin market and his belief that finance will inevitably transition to a platform like Solana. The co-founder sees the network as a robust foundation for the future of finance.

Switching gears to hardware, Yakovenko revealed that the Solana Saga phone, a venture by Solana Labs, has seen modest sales of 2,200 units. Acknowledging the need for a more substantial user base, discussions within the company are ongoing, exploring options such as new models, enhanced applications, and store discounts to boost sales.

As of the latest SOL price analysis, SOL is currently trading at $64.28, boasting a 24-hour trading volume of $2 billion, reflecting a 7.83% increase. Over the past 24 hours, SOL has experienced a 6.54% uptick and a 7.82% rise in the seven-day chart. The cryptocurrency holds the impressive rank of #6 on CoinMarketCap, with a market cap reaching $27 billion.

SOL 1D graph coinmarketcap 3
Source: CoinMarketcap

Related Reading | Bitcoin is a National Security Asset: U.S. Space Force Major

SBF Mulls Appeal In Next Move

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FTX’s kingpin, Sam Bankman-Fried, or SBF, is currently pursuing a potential appeal, as revealed by his legal team. The decision to forgo post-trial motions, as legal experts suggest, hints at the likelihood of an appeal. This aligns seamlessly with the staunch assertion of SBF’s innocence by lead attorney Mark Cohen, who vows to “continue to vigorously fight the charges against him.”

In a letter dated December 1 to Judge Lewis Kaplan, Bankman-Fried’s legal representatives conveyed their decision not to file any post-trial motions. However, they made it clear that they reserve the right to pursue any claims through an appeal. This strategic move by the legal team emphasizes their commitment to challenging the charges against SBF through the appellate process.

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SBF Mulls Appeal In Next Move 5

Before this development, Bankman-Fried’s legal team had filed a bail plea, seeking his release. Unfortunately, Magistrate Joyann Ferguson Pratt denied the plea, citing concerns that the former crypto mogul posed a potential flight risk. His next hearing is scheduled for February 8, 2024.

The downfall of the once-respected billionaire unfolded dramatically with the catastrophic collapse of his digital asset exchange. The repercussions of this event reverberated through the volatile crypto market, culminating in SBF’s conviction in November. The high-stakes courtroom saga, capturing the attention of financial markets and the crypto community alike, concluded definitively with the former FTX founder being found guilty of orchestrating one of the most substantial financial fraud schemes in US history.

SBF Faces 7 Counts Of Fraud & Conspiracy

During the month-long trial, Bankman-Fried faced seven counts of fraud and conspiracy. Prosecutors argued that he had misappropriated a staggering $8 billion from his cryptocurrency exchange’s customers for personal gain, attributing greed as the primary motivator. The jury, consisting of 12 members in Manhattan federal court, delivered the verdict, exposing SBF to a potential maximum sentence of 5 to 20 years in prison for each count.

The charges encompassed wire fraud, a wire fraud conspiracy, and a money laundering conspiracy. Furthermore, sentencing for Sam Bankman-Fried is scheduled for March 28, 2024, marking a crucial milestone in this high-profile legal battle that has sent shockwaves through the cryptocurrency and financial realms.

FTX Receives Approval to Liquidate $873 Million in Assets for Debt Settlement

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Insolvent cryptocurrency exchange FTX has been approved to initiate the sale of approximately $873 million in trust assets, aiming to repay creditors impacted by the company’s 2022 bankruptcy. A recent filing in a Delaware bankruptcy court on November 29 allows the exchange’s debtors to proceed with selling trust assets using their best business judgment and adhering to established selling processes.

FTX’s plan involves the liquidation of assets in a manner that maximizes value while minimizing market disruption for digital investments. The assets, valued at $807 million and $66 million, originate from FTX’s holdings in trusts issued by custodial service provider Bitwise and cryptocurrency asset management firm Grayscale Investments.

This decision comes nearly four weeks after exchange debtors sought permission from Judge John Dorsey to sell six cryptocurrency trusts, including the Bitwise 10 Crypto Index Fund, Grayscale Bitcoin Trust, and Grayscale Ethereum Trust.

FTX’s Recovering Assets

The exchange administrators, tasked with navigating a complex web of debts owed to various creditors since the exchange filed for bankruptcy amid fraud claims last year, have been actively seeking and recovering assets. The recovered assets, according to court filings, amount to nearly $7 billion, including $3.4 billion in cryptocurrency.

FTX, once among the world’s largest trading platforms, faced insolvency in November of the previous year following revelations about the precarious balance sheet of its sibling trading firm, Alameda Research, led by Sam Bankman-Fried.

Despite the challenges, FTX administrators have successfully retrieved significant assets, and the recent approval to sell assets for debt settlement has positively impacted the value of the FTX token (FTT), causing it to surge by 8%.

Meanwhile, Sam Bankman-Fried awaits sentencing in March 2024 after a recent guilty verdict on seven counts of charges. Currently held at Brooklyn’s Metropolitan Detention Center, his potential sentence could extend up to 115 years.

Binance Former CEO CZ In Spotlight: Shkreli’s Take On Jail, Plea Deals, and Probation

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Martin Shkreli, notorious as ‘Pharma Bro’ for his ties to pharmaceutical companies, has weighed in on the predicament of former Binance CEO Changpeng “CZ” Zhao. Shkreli, serving a seven-year sentence for securities fraud and conspiracy charges, shared insights into the potential fate awaiting CZ, who faces up to 18 months in prison under federal sentencing guidelines.

Shkreli, no stranger to jail himself, casually remarked that “jail ain’t so bad” and speculated on CZ’s potential plea deal terms. The former pharmaceutical executive suggested that if CZ faces charges under the Bank Secrecy Act (BSA), probation or a one-year sentence might be likely, given certain conditions.

Section 1956 of Title 18 of the U.S. Code, which CZ might be charged under, carries sentences of up to 20 years for financial transactions involving unlawfully obtained property. Shkreli emphasized the power dynamics at play, alleging that the Department of Justice’s actions aimed to showcase the government’s ability to assert control whenever deemed necessary.

This isn’t the first time Shkreli has discussed jail with cryptocurrency figures. Previously, he shared similar sentiments with Terraform Labs founder Do Kwon and divulged details about former FTX CEO Sam Bankman-Fried’s experiences behind bars.

Binance CZ’s Bid for No Jail Time 

Meanwhile, former Chief of the SEC Office of Internet Enforcement, John Reed Stark, tweeted updates on Binance CZ’s legal battles. The Binance founder, arguing for the right to return to the UAE until sentencing, faces opposition from the DOJ, which seeks a review of the decision allowing CZ to leave the United States. CZ’s legal team vehemently opposes the DOJ’s motion, asserting that the established bail conditions provide sufficient assurance of his return.

The legal tussle takes a fascinating turn as CZ’s defense team discloses plans for sentencing arguments. CZ, pleading guilty to a non-violent, non-fraud offense, aims for either no jail time or a combination of home detention and prison. The defense cites CZ’s willingness to accept responsibility, public figure status, and the lack of criminal history as factors in favor of leniency.

However, the opposition highlights the substantial penalties CZ could face under the Sentencing Guidelines, emphasizing the need for accountability. The DOJ’s motion underscores the severity of Binance’s conduct, with the historic $4.3 billion settlement reflecting the gravity of the situation.

However, the crypto community is awaiting Judge Richard A. Jones’s decision, which is expected by November 27th. The outcome will shape CZ’s future and set a precedent for accountability in the evolving landscape of cryptocurrency regulation.

Related Reading |  UK Regulators Facilitate Blockchain Adoption For Investment Manager: Report

CFTC’s Battle Cry Against Crypto Violations

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Amidst the persistent challenges faced by the cryptocurrency industry, the U.S. Commodity Futures Trading Commission, or CFTC, has declared its intent to maintain a robust stance against cryptocurrency exchanges found to be in violation of trading laws. The commission explicitly stated that it will not tolerate the use of virtual private networks [VPNs] or any other measures designed to bypass Know Your Customer [KYC] regulations. Furthermore, the CFTC emphasized its determination to pursue non-U.S. entities involved in the crypto space.

CFTC
CFTC's Battle Cry Against Crypto Violations 7

According to a report by Business Insider, this heightened scrutiny is exemplified by the recent case involving Changpeng Zhao, the former CEO of Binance, a major player in the cryptocurrency exchange landscape. Zhao, along with his platform, faced charges related to breaches of U.S. anti-money-laundering laws. In response to the allegations, Zhao pleaded guilty and subsequently stepped down from his role as CEO. The repercussions for Binance include substantial fines, with the company set to pay over $4.3 billion, $50 million of which will be contributed by Zhao himself. A significant portion of these penalties is earmarked for settling claims raised by the CFTC, particularly concerning the facilitation of unregistered crypto derivatives trading for U.S. customers.

CFTC Commissioner Christy Goldsmith Romero emphasized the privileged nature of access to U.S. markets, stating unequivocally that such access is not a right. She underscored the commission’s commitment to aggressively pursuing crypto exchanges found to be in violation of trade laws. Notably, the commissioner explicitly mentioned the rejection of practices aimed at evading KYC rules, including the use of VPNs and superficial pop-up questions merely asking users to confirm their non-U.S. residency.

Non-US Entities Under CFTC Scanner

Caroline D. Pham, another CFTC Commissioner, issued a separate statement to emphasize the international reach of the commission’s authority. She stressed that the CFTC’s pursuit of non-U.S. entities in the crypto space will persist without interruption.

This regulatory crackdown comes at a time when the crypto industry is witnessing a protracted legal battle involving Sam Bankman-Fried, the founder of FTX. Facing seven felony counts, including conspiracy to commit money laundering, Bankman-Fried has pleaded not guilty and currently awaits sentencing at the Metropolitan Detention Center in New York. The severity of the charges could potentially result in a lengthy prison term of up to 110 years.

FTX’s FTT Token Outshines Bitcoin With 255% Surge

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For those who took a risk with the FTX token, FTT is currently experiencing a second surge, yielding substantial benefits. According to Santiment, the market value of FTT has skyrocketed by an impressive 255% in comparison to the leading cryptocurrency, Bitcoin [BTC], within just three weeks. This surge coincided with significant news from Binance. Notably, the price surge seems to be influenced by the accumulation of approximately 3 million FTT tokens, valued at $12.8 million, by the top 10 largest wallets in a mere 19 days.

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FTX's FTT Token Outshines Bitcoin With 255% Surge 9

The cryptocurrency sphere was recently shaken by the resignation of Changpeng Zhao, the founder and CEO of Binance, the world’s largest virtual asset exchange. Zhao stepped down after admitting guilt of violating US anti-money laundering laws. As part of the agreement, Zhao is prohibited from holding a managerial position in the company for the next three years.

As discussions unfold regarding the post-CZ era, it’s inevitable to draw parallels between the downfall of Binance’s Changpeng Zhao and the recent legal troubles of FTX’s Sam Bankman-Fried [SBF], who was convicted on seven counts of fraud. While it remains premature to speculate on the trajectory of Binance under its new CEO, FTX, under its fresh leadership, is already initiating a rebranded exchange.

FTX 2.0 Speculations In Post-Binance Landscape

The revitalization of the FTX crypto exchange involves a complex effort with various stakeholders playing a role. It’s crucial to emphasize that relaunching the exchange is a challenging endeavor, as illustrated by the complications observed in the case of crypto lender Voyager. While potential buyers expressed interest, restructuring and the distribution of tokens to creditors presented significant hurdles.

A notable issue causing concern is the lack of any proposed compensation for FTT token holders, leaving these stakeholders uncertain about their future.

However, the recent upswing of the FTX token has resulted in substantial gains for FTT investors, surpassing Bitcoin in market value. This coincided with significant developments at Binance, sparking speculations about the resurgence of FTX 2.0 following the events at the CZ-led exchange. Despite uncertainties, it’s evident that the cryptocurrency landscape has entered a new era.

BIT Elevates Altcoin Options with Solana (SOL) Trading Launch

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BIT, a cryptocurrency exchange specializing in options trading, has announced the addition of Solana (SOL) to its options trading platform. This strategic move, in partnership with market maker Orbit Markets, marks a significant expansion for BIT, already offering options trading for BTC and various altcoins including ETH, XRP, TON, ADA, FIL, and BCH.

Solana, currently the sixth-largest cryptocurrency by market cap, has positioned itself as a formidable competitor to Ethereum. Its notable surge during the 2021 bull market labeled it as a key player in the ‘DeFi Summer,’ distinguishing itself with faster and more cost-effective transactions compared to Ethereum.

The year-to-date surge of over 400% for SOL is attributed to factors such as heightened institutional demand, increased developer activity, a growing user base, and a positive shift away from the shadow of FTX. SOL boasts the fastest growth in Total Value Locked (TVL) among the top 10 chains, with a remarkable 100% increase in the last 30 days, according to DeFiLlama.

BIT’s Solana (SOL) Leap

BIT’s Global Head of Institutional Sales, Justin Buitendam, highlights the rising institutional demand for Solana. He notes that the token is increasingly seen as a viable alternative to Ethereum, and BIT is addressing this demand by introducing options trading to cater to sophisticated trading needs.

Recent endorsements, including Cathie Wood’s positive remarks on CNBC, have further boosted SOL’s credibility. Wood emphasized Solana’s impressive adoption, low-cost platform, high transaction speeds, and continued utility for end-users. The network has overcome past downtime issues and is now poised for success.

Data reveals a surge in institutional investments, with the Grayscale Solana Trust (GSOL) shares hitting a premium of nearly 900% to spot SOL in mid-November. This premium, partially fueled by the market dismissing concerns related to FTX’s founder Sam Bankman-Fried, signifies significant demand from regulated funds.

BIT’s move to enable SOL options trading aligns with the growing institutional interest in Solana, demonstrated by partnerships like Visa’s support for Solana in stablecoin settlements. With Solana’s innovative proof-of-history (PoH) and proof-of-stake (PoS) consensus mechanisms, BIT aims to provide a reliable and transparent marketplace for altcoin options trading.

Related Reading |  Binance Coin (BNB) Plummets 15% Amid Market Turbulence As CZ Takes A Bow 

Securities and Exchange Commission’s Crypto Bias Condemned by Ripple’s Chief Legal Officer

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In response to recent statements made by Gary Gensler, the Chairman of the United States Securities and Exchange Commission (SEC), during the 2023 Securities Enforcement Forum, Ripple’s Chief Legal Officer, Stuart Alderoty, criticized him for forming preconceived notions about the entire cryptocurrency sector. Specifically, Alderoty pointed out that Gensler, quoting the first SEC chair Joseph P. Kennedy, characterized the agency as “partners of honest business and prosecutors of dishonesty.”

Securities and Exchange Commission
Securities and Exchange Commission's Crypto Bias Condemned by Ripple's Chief Legal Officer 11

However, Alderoty highlighted that despite the SEC suing Ripple, it never charged the company with ‘dishonesty,’ as stated in a November 17 post on X. According to Alderoty, the Securities and Exchange Commission had already pre-judged the “unsuccessful case” against Ripple, starting with Bill Hinman, the ethically compromised former SEC enforcement division director. Hinman’s speech served as crucial evidence for Ripple’s defense in the lawsuit.

Alderoty concluded that Gensler, the current Securities and Exchange Commission chief, has presumed the guilt of the entire cryptocurrency industry and has been filing lawsuits against other crypto businesses, such as the case against the crypto trading platform Binance, without proper investigation.

Securities and Exchange Commission’s Interaction with Convicted Individual Sparks Controversy

Conversely, the attorney had previously censured the agency for losing relevance on the global stage and noted its failure to disclose information regarding interactions with an individual with a criminal record, specifically referring to the former CEO of the now-defunct cryptocurrency exchange FTX, Sam Bankman-Fried.

Simultaneously, Alderoty drew a parallel between Gensler and the fictional character Colonel Nathan R. Jessup, portrayed by Jack Nicholson in the 1992 cult classic ‘A Few Good Men,’ a figure symbolizing institutional indoctrination.

In other developments, XRP, the cryptocurrency central to the legal dispute between Ripple and the SEC, was trading at $0.6253 at the time of reporting. This reflected a 2.24% increase in the last 24 hours, a 4.71% decline over the previous seven days, and a 20.97% gain over the month, based on data available as of November 20.