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Celebrities who promoted troubled crypto exchange FTX are facing a class action lawsuit. 

Tom Brady, Gisele Bundchen, Steph Curry and Larry David are among the stars named in the lawsuit, which was filed by attorneys David Boies and Adam Moskowitz in Florida. The Block first reported that Boies was discussing a class action suit with clients on Tuesday.

The move comes days after FTX filed for bankruptcy protection in Delaware. Former CEO Sam Bankman-Fried, who stepped down from the company last week, is also named in the suit.

The lawsuit claims Brady, Bundchen and others “actively participated” in the “offer and sale of unregistered securities in the form of yield-bearing accounts.”

Boies and Moskowitz are leading a similar class action suit against the Dallas Mavericks basketball team and its owner, Mark Cuban, for promoting the now-bankrupt Voyager, a crypto lending 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.

Canadian crypto lender Ledn said it has no exposure to Genesis Global Capital and is fully operational after the latter paused withdrawals.

Genesis Global Capital, which is suspending withdrawals, was Ledn’s primary lending partner at the start of its operations. Ledn has since reduced its risk concentration by diversifying its pool of lending partners, Ledn said. The crypto lender added that it did not have any active lending relationship with Genesis beyond October.

Genesis Global Capital, Genesis Global Trading’s crypto lending arm, paused withdrawals citing a high volume of withdrawal requests from customers in the wake of the market turmoil triggered by the FTX collapse.  Last week, Ledn also stated that it had some exposure to Alameda Research, FTX’s sister firm.

Crypto lender Gemini said today it was also pausing withdrawals after the Genesis announcement.

Genesis is the latest crypto lender to cite the FTX collapse as a reason for its financial woes. BlockFi revealed on Tuesday that it had significant exposure to the now-bankrupt crypto exchange. The platform has since blocked withdrawals and is reportedly preparing for bankruptcy proceedings.

© 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.

Matter Labs, the parent company of Ethereum scaling protocol zkSync, has raised $200 million in a Series C round. 

Blockchain Capital and Dragonfly led the investment, with participation from LightSpeed Venture Partners, Variant, and Andreessen Horowitz — who had led the previous $50 million Series B round — according to a statement. Matter Labs did not disclose the valuation.

The funds from its Series C round will be used to launch first-party projects built by Matter Labs itself, grow the Matter Labs team and fund projects built by external parties. It will also be used to start Matter University, which will act as its onboarding and education platform for users and builders.

This raise comes amidst a time of uncertainty in the crypto markets, as the fallout of FTX and Alameda continues to wreck havoc on the crypto markets.

“No matter how bad this bear market gets, we are well positioned to grow our team, ship our protocol, and ship our mission,” zkSync’s chief product officer Steve Newcomb told The Block.

The raise brings Matter Labs’ total funding to $458 million. Matter Labs claims this latest funding round will give it enough runway to ensure capital is not a constraint as it focuses on developing its ecosystem and new early-stage product developments.  

© 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.

FTX investors including Temasek, Sequoia Capital and SoftBank are writing off hundreds of millions of dollars they poured in the now-failed exchanged, Bloomberg reported, citing people familiar. 

Singapore’s Temasek International is writing off its up to $300 million FTX investment, while Sequoia Capital wrote down the full value of its $214 million bet on the exchange. SoftBank Group Corp. is expecting a loss of $100 million on its investment.  

The news comes days after FTX filed for bankruptcy protection and amid a series of cryptic tweets by former CEO Sam Bankman-Fried that he’s trying to raise liquidity and make customers whole. 

© 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.

Genesis is temporarily suspending withdrawals and new loan originations, after it took large hits from Three Arrows Capital and FTX.

Genesis will continue to offer over-the-counter trading for spot and derivatives trading, plus its custody services. The comments were made by Genesis Interim CEO Derar Islim during a client call, according to CoinDesk.

Genesis was the largest prime broker in the crypto space. In March, it had $14.6 billion of active loans, according to The Block’s Data Dashboard. Yet the lending business took a big hit when the cryptocurrency Luna collapsed, removing $30 billion from the crypto market cap and pushing trading firm Three Arrows into bankruptcy. Genesis had made large loans to Three Arrows, which were not repaid. Genesis’ parent company DCG took on the debt, which was estimated north of $1 billion.

Following on from this, Genesis started significantly slowing down its operations. Last quarter, its loan originations dropped by a third in dollar value compared to the previous quarter. It also reported just $2.8 billion in active loans. At the same time, it made cost reductions, laying off 20% of its workforce. Top executives left the company, including former CEO Michael Moro and former Chief Risk Officer Michael Patchen.

The sudden collapse of crypto exchange FTX was the most recent blow. Genesis said that its derivatives trading arm had $175 million locked up on the exchange. In response, DCG provided Genesis with a $140 million equity infusion.

© 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 exchange Gemini said its Earn program “will not be able to meet customer redemptions within the service-level agreement of five business days” following the announcement that lending partner Genesis Global Capital has paused withdrawals.

“The past week has been an incredibly challenging and stressful time for our industry,” Gemini wrote in an official blog post, continuing:

“We are disappointed that the Earn program SLA will not be met, but we are encouraged by Genesis’ and its parent company Digital Currency Group’s commitment to doing everything in their power to fulfill their obligations to customers under the Earn program. We will continue to work with them on behalf of all Earn customers. This is our highest priority. We greatly appreciate your patience.”

Gemini stressed that its other products and services are unaffected and that it is a full-reserve exchange and custodian.

© 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.

Luna Foundation Guard (LFG), a non-profit created in January to grow the Terra ecosystem, has published an audit stating that it spent $2.8 billion in bitcoin and stablecoins to defend the TerraUSD (UST) stablecoin peg during the May collapse.

LFG was set up to defend the UST peg as one of its mandates. The organization held bitcoin, stablecoins and other cryptocurrencies to defend UST’s peg to the U.S. dollar.

The audit was performed by JS Held, according to an LFG statement on Wednesday. The audit report stated that LFG spent 80,081 BTC and $49.8 million in stablecoins, amounting to $2.8 billion in total, to defend the UST peg. This defense happened during the Terra ecosystem’s death spiral that occurred in May. At the time, UST lost its parity with the U.S. dollar, triggering a system-wide collapse of the Terra ecosystem — including its flagship crypto, Luna.

Apart from LFG’s efforts, the report also stated that Terraform Labs, headed by Do Kwon, also tried to defend the UST peg. Terraform Labs reportedly spent $613 million of its own funds to defend the UST peg.

The JS Held audit report countered claims that LFG and Terraform Labs embezzled funds during the UST de-peg incident. “The report shows that all LFG funds were spent to defend UST’s peg parity with the Dollar as declared and that LFG’s remaining balances are the only funds remaining,” the audit report stated.

LFG balances between May 7 and May 16. Image: JS Held audit of LFG’s books

Reports emerged back in September that LFG had another previously unknown wallet. The report stated the wallet held over 3,300 BTC that Korean authorities were looking to freeze. LFG denied the allegation at the time — and today’s audit report supported LFG’s position, stating that the organization has not moved any funds since May 16.

Kwon commented on the audit report, stating that it was important to distinguish between the Terra collapse and FTX’s bankruptcy.

“While there have been multiple recent failures in crypto, it is important to distinguish between Terra’s case, where a transparent, open-source decentralized stablecoin failed to maintain peg parity and its creators spent proprietary capital to try to defend it, and the failure of centralized custodial platforms where its operators misused other people’s money (customer funds) for financial gain,” said Kwon.

With the audit published, attention could now shift towards compensation efforts for users affected by the Terra ecosystem collapse. LFG previously postponed work on compensation, citing ongoing litigation by aggrieved parties.

© 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.

The Seoul Southern District Prosecutors’ Office raided Chai Corporation, a payments technology company founded by Terraform Labs cofounder Daniel Shin (Shin Hyun-seung), according to a report from Forkast.

In addition to being founded by Shin, Chai had a partnership with Terraform Labs, in which it integrated Terra’s won-pegged stablecoin KRT into its payment service, Forkast said. Prosecutors allege that the company used customers’ personal information in launching the service, without consent.

Earlier this week, it also summoned Shin as part of an investigation into whether he breached capital markets law — accusing him of storing pre-issuance Luna tokens without notifying regular investors, and then selling the tokens off for $106 million, according to the report.

It is one of several strings authorities have pulled at over the past few months as they attempt to unravel what happened at Terraform Labs leading up to its collapse in May, when the company’s U.S. dollar-pegged stablecoin TerraUSD depegged. The implosion wiped out approximately $40 billion in investor wealth.

Shin has attempted to distance himself from Terraform Labs and claimed that he cut ties with both in 2020 to focus on Chai Corporation, which has been operating independently from Terra since Q1 2020, according to the company. 

Nevertheless, his home was raided in July as part of investigations into Terra. He was also due to testify in parliament on Oct. 6 but pulled out the day before. 

Prosecutors made their first arrest in the case at the start of October, when they apprehended Terraform Labs’ head of general business operations, surnamed Yu. They claimed Yu ran bots to wash trade crypto and manipulate prices. Hours later, a South Korean court dismissed the arrest warrant and questioned whether detainment was necessary.

Authorities are yet to apprehend the man at the center of it all. Terraform Labs’s Do Kwon fled Singapore at some point following the issue of a warrant for his arrest on Sept. 14. Reports suggest he is now somewhere in Europe. Kwon said he is not on the run and that charges against him are “politically motivated.”

© 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.

Blockchain.com is adding a banking expert to its board of directors, Joseph Otting, the former U.S. Comptroller of the Currency, the company said in a blog post.

“I’m honored to join the board of Blockchain.com and help it navigate the regulatory landscape as one of the most established firms in its space,” Otting said in a statement. 

Otting served as comptroller during the Trump administration, from 2017 to 2020. The comptroller oversees federally chartered banks, savings associations and federal branches of foreign banks that operate in the United States.

Otting previously worked in the banking industry, serving as president of CIT Bank and OneWest Bank. Otting has also held roles at U.S. Bancorp, Union Bank of California and Bank of America. 

The company’s board of directors includes Jim Messina, the Obama-era White House deputy chief of staff, and former American Airlines CEO Tom Horton.

© 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.

Shark Tank’s Kevin O’Leary said he would back former FTX CEO Sam Bankman-Fried again if he had a new venture. This comes despite FTX’s collapse that left potentially more than a million creditors in the lurch due to an estimated $8 billion hole.

“You can love him or hate him for what’s happened. But he was one of the most brilliant traders in the crypto universe,” said O’Leary in an interview with Onchain Capital CEO Ran Neuner on Crypto Banter. When asked if he would back Bankman-Fried in a new venture, he said, “The answer would be yes.”

O’Leary said Bankman-Fried would have to suffer “the slings and arrows” but that he still liked the former CEO and felt sorry for him.

Bankman-Fried’s exchange collapsed after a bank run on the exchange revealed it did not have enough liquid assets to cover its client liabilities. Bankman-Fried claims that the exchange technically has enough illiquid assets but doubts have been raised that the assets can be sold for anywhere close to their supposed value.

The exchange has been left with a shortfall of around $8 billion, according to the Wall Street Journal. The problem was allegedly caused by the exchange’s sister company Alameda Research being able to borrow customer funds, according to Reuters and CNBC.

The exchange is now being investigated by the U.S. Department of Justice, the Securities and Exchange Commission and the Commodity Futures Trading Commission, according to Reuters.

© 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.