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Jump Crypto said it’s not shutting down. 

The trading firm, responding with a tweet to social media speculation of its imminent demise, said it wanted to “debunk a few things” because rumors were “flying around.” 

“We believe we’re one of the most well-capitalized and liquid firms in crypto,” the tweet said. “We are still actively investing and trading, so if you’re looking for funding, please get in touch.” 

The firm is still actively investing and trading, according to the update, which concluded by adding, “if you’re looking for funding, please get in touch.”

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Authorities in multiple jurisdictions are questioning Binance over the international crypto exchange’s role in the downfall of FTX, a company spokesperson confirmed to The Block.

The inquiries come on top of ongoing investigations into FTX itself by U.S. law enforcement and regulators. 

Binance’s acknowledgment of the inquiries comes in response to criticism from UK MPs over an alleged lack of information provided to a parliamentary committee on that exact topic. A company spokesperson claimed more details could not be provided because the exchange is cooperating with regulatory authorities. 

“As explained to the Treasury Select Committee, we are unable to share any documentation in relation to FTX beyond the factual information we provided because the matter is subject to ongoing inquiries by regulatory authorities in a number of jurisdictions, with whom we are cooperating and sharing information on a strictly confidential basis,” a Binance spokesperson told The Block.

A committee in the U.S. House of Representatives also plans to scrutinize Binance’s role in FTX’s collapse, on top of allegations of massive malfeasance by FTX executives, including founder Sam Bankman-Fried. The committee announced it will hold a hearing in December, and named Binance as one of the companies it wants to hear from, along with FTX and Alameda Research. 

In a since-deleted tweet, Binance CEO Changpeng ‘CZ’ Zhao said his company would not send a representative to the hearing.

Members of the UK House of Commons Treasury Committee were disappointed with the evidence Binance provided them about their role in the collapse, Bloomberg reported today. The company largely stuck to a public timeline of events in its response to a question about its role in the collapse of its rival. 

Binance announced that it sold its holdings of FTT, the FTX native token, on Nov. 7. Binance then stepped away from its initial proposal to acquire FTX on Nov. 10. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Troubled Asian crypto lender Vauld has funds stuck in the now-bankrupt crypto exchange FTX, two sources with direct knowledge of the matter told The Block.

The exposure is worth around $10 million, one of the sources said. Vauld used FTX, among other exchanges, to execute trades of its customers since it does not have its own order book, said the source.

The FTX exposure is the latest blow for Vauld, which halted client withdrawals in July and owes over $400 million to creditors. In August, India’s Enforcement Directorate froze assets worth $46 million after it found a Vauld client was involved in a money laundering case.

Vauld has until Jan. 20 to sort its financial issues, having received another credit protection extension last week. The firm, however, has the option to apply for yet another extension if needed.

As part of its restructuring options, Vauld has been discussing a potential deal with rival Nexo since July. At the time, Nexo entered into a 60-day exclusive due diligence agreement with Vauld to potentially acquire it, but it has extended the due diligence period twice. Last month, The Block reported that Nexo could weigh a possible deal.

Vauld is now set to host a meeting with Nexo, its creditor committee and financial advisor Kroll on Nov. 19, said the second source.

The purpose of the meeting will be to update the creditor committee regarding Vauld’s progress in the restructuring, including a discussion on the Nexo terms, said the source.

It remains to be seen whether Nexo is still interested in making a deal with Vauld after the FTX exposure. Nexo declined to comment to The Block and Vauld did not respond to a request for comment.

Vauld customers’ funds remain stuck. If Nexo doesn’t acquire Vauld, the latter has said it has other options to explore, including issuing a token and raising capital.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto lender Nexo earlier this year made an unsuccessful offer to acquire troubled rival BlockFi as part of a proposed deal worth about $850 million, according to an “indicative investment proposal” document obtained by The Block.

The offer was made in July when BlockFi was struggling financially after losing $80 million due to its exposure to now-bankrupt crypto hedge fund Three Arrows Capital. BlockFi rejected Nexo’s offer and chose to stick with a non-final deal with FTX.US, which filed for bankruptcy protection last week alongside sister trading firm Alameda Research.

“I can confirm that we offered BlockFi a deal in the summer,” Nexo co-founder Antoni Trenchev told The Block. “It was a better alternative to the FTX proposal, but BlockFi’s management chose to go with FTX. Since it did not make economic sense for them to go with a worse deal, we were perplexed and there were speculations about conflicts of interest.”

Trenchev said had BlockFi accepted Nexo’s offer, it might not have found itself in its current situation. While BlockFi co-founder and Chief Operating Officer Flori Marquez had suggested the company was fine after FTX first faced a liquidity crunch, the fallout spread fast. BlockFi had to pause withdrawals last week, and the Wall Street Journal reported on Wednesday that it was preparing for a possible Chapter 11 bankruptcy protection filing.

“We already knew by then that Alameda was BlockFi’s largest debtor, second only to Three Arrows Capital which they had just liquidated at a loss,” said Trenchev. “It is Nexo’s belief that our proposal, which focused on better risk management, cost reduction, new products, and markets, could have created a lot of value for all stakeholders — the clients, the shareholders, and BlockFi as a company.”

Nexo’s $850 million proposal

Nexo had offered BlockFi a deal worth a total of around $850 million, Trenchev said. It included $30 million for the acquisition of 51% of BlockFi through a combination of cash and equity, $30 million payable to BlockFi’s existing shareholders upon successful S1 registration of BlockFi’s yield product with the U.S. Securities and Exchange Commission and a $500 million credit line to address BlockFi’s liquidity needs, according to the investment proposal document.

The offer also included Nexo having a 5-year call option on the remaining 49% of BlockFi’s equity at a 10x valuation of the proposal and termination of BlockFi’s unvested employee option pool, “thus increasing stakes of existing shareholders,” according to the document. The offer for the 49% stake was worth at about $288 million, making the total offer around 850 million, said Trenchev.

FTX.US’s offer for BlockFi was worth a total of $680 million. It included a $400 million credit facility and an option to acquire BlockFi at a price up to $240 million.

Nexo was also willing to partner with others, including FTX.US, to make its offer to BlockFi, according to an email sent in July by Nexo’s head of corporate finance and investments, Tatiana Metodieva, to BlockFi executives including co-founders Marquez and Zac Prince.

“We would like to bring to your attention Nexo’s non-binding offer for BlockFi’s acquisition,” the email read. “We are prepared to explore the opportunity individually or in coordinated efforts with other investors, including but not limited to FTX, should the latter decide to withdraw from the process for any reason.”

BlockFi did not respond to requests for comment from The Block.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Key Senate Democrats are joining the calls for more disclosure of the historical finances of bankrupt crypto exchange FTX and the cluster of firms that had ties to it and founder Sam Bankman-Fried. 

“These massive losses raise questions about the behavior of former FTX CEO Sam Bankman-Fried and other company executives,” Senators Elizabeth Warren, D-Mass., and Dick Durbin, D-Ill., wrote to Bankman-Fried and his emergency replacement, John Ray.

“Please provide complete copies of all FTX and FTX-subsidiary balance sheets, from 2019 to the present,” the letter continued, running through a laundry list of other suspect transactions and accounting practices that have cropped up in news reports since the firm imploded last week. 

The letter also copied Gary Gensler and Rostin Behnam, the respective heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission. The two market regulators have been vying for authority over crypto exchanges. 

Recent bankruptcy filings have shown Ray, who was part of the post-mortem on Enron’s collapse, to be facing similar struggles dissecting the accounting and transactions of the firm. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Kristin Johnson, a commissioner at the Commodities Futures Trading Commission, defended the agency’s approach to digital asset regulation in the wake of FTX’s collapse, saying the agency lacked authority to fully supervise the crypto industry.

‘’CFTC lacks spot market jurisdiction for digital assets, plainly stated,’’ she told a City and Financial Global crypto policy conference in London.

One part of the FTX group that the CFTC did oversee, a crypto derivatives platform called LedgerX, had not been included in the bankruptcy filing, Johnson noted.

She explained how the agency had earlier required LedgerX to put in place new internal monitoring and other processes in order to meet regulatory standards.

”We have, right now, boots on the ground at LedgerX. We are directly and effectively monitoring on a daily if not hourly basis verifying what we believe to be the case, that every dollar of customer assets held at LedgerX are accounted for.”

The collapse of FTX led to heated debates in Congress over how best to regulate the crypto industry. FTX’s main operation was based outside the U.S. and licensed in the Bahamas, though the company also had a sizable U.S. trading platform. 

The firm filed for bankruptcy last Friday with subsequent filings confirming multibillion-dollar holes across balance sheets, due to a “complete failure of corporate controls.” FTX founder and former CEO Sam Bankman-Fried is actively attempting to undermine the bankruptcy process through public communications and a competing Bahamian bankruptcy process, outside attorneys and a new CEO hired by FTX argued in court today. 

U.S. lawmakers are currently reviewing several pieces of legislation designed to create a more robust regulatory framework for digital assets. 

Johnson said the CFTC walked a fine line when it came to overseeing crypto firms as it didn’t have the power to force many of them into the agency’s regulated space.

She also argued that the definition of digital assets in the context of bankruptcy proceedings remains unclear. Many digital assets are considered securities under U.S. law, while bitcoin itself has been defined and regulated as a commodity, due to its lack of a central ownership structure or common enterprise. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto prices were treading water on Thursday while stocks led equity market losses. 

Bitcoin gained 0.2% to $16,501 over the past day, while ether shed 0.3% to trade at $1197, according to data via CoinGecko. The leading cryptocurrencies by market cap are now up 5% and 10%, respectively, over the past seven days. 

BTCUSD chart by TradingView

Other cryptocurrencies fared slightly worse, with ADA and MATIC dipping 1.8% and 2.7%, respectively. Elsewhere, UNI was trading back below $6 as it dropped 3.6%.

Crypto stocks Silvergate, Coinbase sink

Crypto-related stocks continued to trade lower on Thursday. The S&P 500 and the Nasdaq 100 were down 1% and 0.84%, respectively. 

Crypto bank Silvergate crashed 11% shortly after the opening today, according to Nasdaq data via TradingView. The bank bucked a downward trend yesterday but failed to carry that momentum into today’s session.

SI chart by TradingView

The stock has traded down intermittently throughout the week as potential exposure to FTX, and a downgraded price target — slashed to $40 from $64 — from Goldman Sachs appears to have an impact.

Block shares were down over 3.6% to $67.33, and Coinbase fell 3.6% to $47.07. Shares in the exchange are down almost $5 this week. MicroStrategy fell 1%, trading around $167.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Gemini, OKX and Crypto.com experienced “severe” outflows over the past week while a declining stablecoin market shows an investor exodus, according to analysts at JPMorgan Chase.

Exchange volumes have fallen throughout the year, according to The Block’s data, with monthly volumes dropping from $841 billion in January to $544 billion in October. 

“High-quality” asset balances, including bitcoin, ether, USDT, USDC, and BUSD, are also much lower, JPMorgan said.

“Outside Binance, the year-to-date decline in these balances is of the order of 80%. Bitfinex and Binance saw the smallest declines YTD,” analysts wrote. 

Crypto contagion

The outflows come amid the collapse of Sam Bankman-Fried’s FTX empire, which has rocked crypto markets and equities. 

FTX and sister firm Alameda Research, which Bankman-Fried had insisted were kept at arm’s length, were actually heavily co-reliant; it was revealed FTX had been sending customer funds to Alameda. Both firms filed for Chapter 11 bankruptcy protection on Friday. 

Over the past few days, the effect of the exchange’s collapse has continued to echo across crypto markets. 

“We had argued last week that, similar to what we saw after the collapse of TerraUSD last May, the current deleveraging phase that started with the collapse of Alameda Research and FTX is likely to reverberate for at least a few weeks inducing a cascade of margin calls, deleveraging and crypto company/platform failures,” JPMorgan’s analysts wrote.

On Wednesday, Genesis Global Capital, one of the biggest crypto-native firms, announced its exposure to the FTX collapse and said it would halt all customer withdrawals and loan originations after taking a significant hit from the fallout of Three Arrows Capital (3AC) and FTX.

Following this, Gemini announced its Earn program would not be able to meet customer redemptions within the five-day time frame set in the firm’s service-level agreement.

Galois Capital, CoinShares and Huobi, among others, all have funds stuck on FTX, JPMorgan said. 

Prominent investors — including Paradigm, Temasek, and Sequoia — have also been affected by the collapse, with many of the funds having written their investment in FTX down to zero. 

Stablecoin market shrinkage

The shrinking stablecoin market has also illustrated the exit of investors. Stablecoins are the equivalent of cash in the crypto ecosystem, providing a bridge to traditional finance, JPMorgan said. 

The growth of the stablecoin market can be thought of as a proxy of the amount of money that has entered the crypto ecosystem from fiat, analysts said.

“The market cap of the largest stablecoins peaked at $186bn last May before the Terra collapse, compared to less than $30bn at the beginning of 2021 and around $5bn at the beginning of 2020,” analysts said. 

However, the stablecoin market has declined by $41 billion since then — just under half of which reflects the collapse of TerraUSD.

“It would be difficult here to imagine a sustained recovery in crypto prices without the shrinkage of the stablecoin universe stopping,” JPMorgan said.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

UK lawmakers are not convinced by the evidence Binance provided to understand its role in the collapse of FTX, according to a member of Parliament. 

Binance sent answers to questions from the UK’s parliamentary committee investigating the downfall of FTX following a hearing on Monday, including on its role in the collapse of FTX. FTX was a major competitor of Binance’s prior to its failure and subsequent bankruptcy. 

“It doesn’t really give us the real background detail,” Alison Thewliss, a member of the Treasury Committee, said in a Bloomberg interview. “I’m sure the committee will be asking more questions to get to the details of what happened here, because there are wider implications for this collapse and for the crypto sector as a whole.”

In response to the question of what role it played in FTX’s collapse, Binance shared a series of news articles since the catalytic leak incriminating FTX for mishandling its funds on Nov. 2. The Treasury Committee reportedly expected to review Binance’s internal records, including the decision to unload its holding of FTT, FTX’s native token. 

“We don’t have much ability to push for more than we’ve received,” Treasury Committee Harriett Baldwin said in the interview.

The committee’s recommendations for crypto regulations in the UK based on the inquiry into Binance and FTX will be impacted, Thewliss said in the Bloomberg report.

UK policymakers are working on more comprehensive rules for digital assets. The national regulator, the Financial Conduct Authority, is currently responsible for licensing crypto firms based on anti-money laundering compliance. With the new laws in the works, the FCA will have broader control over crypto assets. 

Binance is also under scrutiny in the U.S., where the House Financial Services Committee will hold a December hearing on FTX’s downfall and the state of the crypto industry. 

Binance and the UK Treasury Committee have been contacted for further comment. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Heroic Story, a web3 gaming and entertainment studio, has raised $6 million in a seed round led by Upfront Ventures. 

Investors in the round, which brings the startup’s total financing to date to $7.4 million, also include Multicoin Capital and Polygon Technology, according to a company release. Angel investors such as Andreessen Horowitz’s Jonathan Lai and Miramax’s head of film Wolfgang Hammer also participated. 

Formed at Y Combinator in 2019 by brothers Jay and Scott Rosenkrantz, Heroic Story aims to reimagine traditional tabletop role-playing games (RPGs) — similar to Dungeons & Dragons — for the web3 era.

Reimagining tabletop RPG games

The startup initially focused on trying to solve problems for storytellers with new technologies, such as virtual and augmented reality, Jay Rosenkrantz said in an interview. Halfway into the company’s life, however, the team recognized that NFTs could help storytellers capture value. 

Heroic Story then launched its first storytelling game, Legends of Fortunata, which enables writers to collaboratively create stories for characters in a shared world then mint them as NFTs. The proceeds from the auction went back into funding the creator community, he said. After seeing the reaction to the shared world, the team started exploring game systems that were really flexible and landed on tabletop RPGs.

Such tabletop RPGs have several pain points in terms of attracting new players, Rosenkrantz explained. They can be very time-consuming and often need to be played with an expert team who can help guide the new player. Heroic Story aims to fix these issues. 

“If you wanted to play, you wouldn’t need to know a group of people, you could just come to the platform and meet people that you would enjoy playing with and you wouldn’t even have to play with the same group every week,” Rosenkrantz said.

The tech stack

Legends of Fortunata’s primary assets are on the Ethereum network.  Polygon is an investor in the round and the team is in talks with Polygon about building a marketplace for the assets.

Rosenkrantz wants to abstract away a lot of the tech side complexity, meaning that users can choose whether they want to dive deeper and access the web3 elements.

“We really want to protect the game and what makes the game fun and beloved, already, for millions of people around the world as much as we can,” Rosenkrantz said. 

The funds from the raise are being used to hire talent and develop the game to scale to more players, Rosenkrantz said. A portion of the funds will also go toward marketing to a mainstream audience once the beta version of the game is ready. 

NFT and gaming seed-stage deals have declined for three quarters after reaching a high in the fourth quarter of last year, according to data from The Block Research.

Seed and pre-Series A deal categories from The Block Research

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.