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The Australian Securities and Investments Commission has suspended FTX Australia’s financial services license in the country until May 15, 2023.

“Until [December 19] 2022, FTX Australia can continue to provide limited financial services that relate to the termination of existing derivatives with clients,” the securities regulator said in a statement.

“Prior to the suspension, FTX Australia’s license permitted it to deal in, make a market for and provide general advice relating to derivatives and foreign exchange contracts to retail and wholesale clients,” the regulator said.

FTX and more than 100 affiliated entities filed for Chapter 11 bankruptcy protection in the U.S. on Nov. 11. KordaMentha’s John Mouawad, Scott Langdon and Rahul Goyal were appointed voluntary administrators for FTX Australia that day, as well as a digital currency exchange known as FTX Express Pty Ltd. that the commission does not regulate.

© 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.

Most bitcoin mining stocks tracked by The Block trended upward on Tuesday, some by double digits.

Bitcoin was trading at around $16,800 by market close, according to data from TradingView.

BTCUSD Chart by TradingView

BIT Mining’s stock rose 29.32%, followed by Core Scientific (14.97%) and Stronghold Digital Mining (13.87%).

On the down side, Greenidge Generation fell 10.87%, followed by Iris Energy (-4.37%) and Mawson Infrastructure (-2.89%). 

Here’s how crypto mining companies performed on Tuesday, Nov. 15:

© 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.

Quick Take

• Interoperability protocols are becoming more relevant for the continued development of increasingly fragmented blockchain ecosystems.
• While most existing bridges provide a straightforward approach towards bridging assets, they introduce trade-offs that most users are not privy to.
• For mass adoption, understanding these trade-offs would be sub-optimal, so the focus would be on creating a seamless user experience, as LiFi has done.
• However, LiFi aggregates bridging options instead of bridge liquidity, though the latter introduces various technical challenges.
• As interoperability protocols grow more robust, they ultimately face the possibility of breaking transactions’ atomicity, though this possibility may not eventually be entertained.

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An outspoken proponent of digital assets just won a high-ranking post in Congress. 

Rep. Tom Emmer, R-Minn., won the race for House GOP whip, according to multiple reports. The Minnesota congressman will be responsible for keeping Republicans in line on key votes when the new Congress begins in January. He beat Rep. Jim Banks, R-Ind., in a runoff.

Due to the close nature of this year’s midterm elections, neither party has cemented a majority, but Republicans are expected to narrowly reclaim the House of Representatives. That would make Emmer the new House majority whip. 

Emmer’s office did not immediately respond to a request for comment.

Emmer’s new role as party whip could give new attention to cryptocurrency issues, though he will also have to grapple with what will figure to be one of the narrowest House majorities in U.S. history. A current member of the House Financial Services Committee, Emmer filed a bill in January to ban the Federal Reserve from issuing a central bank digital currency directly to individuals. He more recently took aim at the Securities and Exchange Commission after the collapse of crypto exchange FTX. 

As National Republican Campaign Committee chair the last two election cycles, Emmer helped elect several of his House colleagues, a fact that likely aided him in the leadership race — though Republicans fell short of the expected ‘wave’ of seats they’d hoped to gain heading into midterms. 

The new Congress could take significant action on cryptocurrency bills next year, especially after FTX filed for bankruptcy protection. Lawmakers on the House Financial Services Committee spent months drafting a bipartisan bill to regulate stablecoins in the U.S. Meanwhile, former FTX CEO Sam Bankman-Fried advocated heavily for a bill that would grant new regulatory authority to the Commodity Futures Trading Commission, before the exchange collapsed. 

© 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 executive also said that the firm’s investment was only a small part of its total assets and that it never traded or held assets on FTX. Additionally, it never invested in tokens related to the exchange such as FTT.

“We feel deep regret for having invested in a founder and company who ultimately did not align with crypto’s values and who have done enormous damage to the ecosystem,” Huang said on Twitter.

Paradigm’s investment totaled $290 million in a group of firms tied to ex-FTX CEO Sam Bankman-Fried.

Huang said that while some people have been left with doubts about the value of crypto following the quick demise of the exchange, “the issues at FTX are precisely ones that decentralized finance can solve through increased transparency and security.”

Paradigm launched a $2.5 billion crypto fund last year and has backed firms such as DeFi wallet Argent, decentralized exchange dYdX and Gauntlet.

© 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 bank Silvergate shares tanked 12% as the ripple effects of FTX’s collapse continue. 

Last week, the La Jolla-based crypto bank said its exposure to FTX was limited to deposits, but a recent Goldman Sachs note said analysts could not confirm Silvergate’s exposure to FTX and related entities. Short seller Marc Cohodes also questioned the bank’s exposure to FTX. 

“Silvergate has no outstanding loans to, nor investments, in FTX, and FTX is not a custodian for Silvergate’s bitcoin-collateralized SEN Leverage loans. To be clear, our relationship with FTX is limited to deposits,” Silvergate Chief Executive Officer Alan Lane said on Friday, the same day FTX filed for bankruptcy protection.

As of Sept. 30, Silvergate’s total deposits from all digital asset customers totaled $11.9 billion, of which FTX represented less than 10%, Lane said. 

On Friday, Goldman updated its estimates to assume greater deposit outflows “with a peak-to-trough decline of roughly $4.4bn, or 32%.” It reduced its target multiple given the bank’s exposure to a rapidly deteriorating asset class and the potential for significant earnings degradation.

“We would note, however, that we believe the risk of liquidity issues is relatively low at this point,” the note said. Goldman also cut its price target to $40 from $64.

Front office reshuffle 

The crypto bank announced two fundamental changes to its leadership team on Nov. 7. Ben Reynolds was promoted to the role of president, and Kate Fraher was appointed the firm’s chief risk officer.

It was unclear whether Reynolds and Fraher were replacing executives who had left the firm. Silvergate did not immediately respond to a request for comment from The Block at the time.

© 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.

This research piece is available exclusively to
members of The Block Research.
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this Research content on The Block Research.

High-profile FTX promoters like Tom Brady and Steph Curry could have a lawsuit on their hands.

Famed lawyer David Boies is talking to clients about a possible class action lawsuit against celebrity promoters of the now-bankrupt crypto exchange, according to a source with direct knowledge of the matter. 

Boies’s firm, Boies Schiller Flexner LLP, has spoken with clients from a similar class action lawsuit against failed crypto lender Voyager, the source said. The Voyager case targets CEO Steve Ehrlich, the Dallas Mavericks basketball team and the team’s billionaire owner Mark Cuban. Voyager filed for bankruptcy protection in July.

The possible suit comes days after FTX’s shocking collapse. FTX CEO Sam Bankman-Fried resigned his post when the exchange filed for bankruptcy protection in Delaware on Friday. At its peak, the company was valued at $32 billion, but crumbled after a run on its native utility token FTT.

Boies is a well-known trial lawyer who has represented the infamous medical company Theranos, Jeffrey Epstein’s victims and disgraced film producer Harvey Weinstein, among others. The Financial Times reported last week that Boies had been approached by FTX investors and customers about a potential lawsuit. He also helped argue the U.S. government’s case against Microsoft in a landmark anti-trust trial. 

Celebrity defendants to be determined 

Boies is co-lead counsel on the Voyager case with Adam Moskowitz, managing partner of The Moskowitz Law Firm. Moskowitz and a Boies spokesperson did not respond to a request for comment.

It’s not clear which FTX promoters the possible class action suit might target. Celebrity promoters of the exchange, including Tampa Bay Buccaneers quarterback Tom Brady and Golden State Warriors point guard Stephen Curry appeared in FTX ads and made equity deals with the exchange. Others associated with FTX include basketball star Shaquille O’Neal, TV star and “Seinfeld” co-creator Larry David, “Shark Tank” TV personality and businessman Kevin O’Leary and David Ortiz, who played baseball for the Boston Red Sox.

The Miami Heat basketball team is also linked to FTX. The team and Miami-Dade County ended their business relationship with the exchange last week, after the company inked a $135 million naming rights deal for FTX Arena last year.

© 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.

If former FTX CEO Sam Bankman-Fried had designs on repairing his reputation as a responsible steward of a once multi-billionaire-dollar crypto empire, he’s certainly complicating matters.

Bankman-Fried’s seemingly incoherent Twitter-stream-of-consciousness thread continued to unfold on Tuesday, most recently with the claim that, “FTX US had enough to repay all customers,” a statement he simultaneously undercuts with the caveats that his memory might be faulty and that “not everyone necessarily agrees.”

He told the New York Times on Sunday that he couldn’t explain the series of cryptic tweets he’d been posting over the past two days and that he was making it up as he went along. The thread originated on Sunday, when the embattled 30-year-old crypto tycoon simply said “1) What,” which he then followed with eight more tweets spelling out “HAPPENED,” one letter at a time.

The former MIT graduate founded both FTX and FTX US, a crypto trading empire once worth more than $30 billion. Bankman-Fried and FTX are now the subject of investigations by the U.S. Securities and Exchange Commission and Justice Department amid the company’s shock filing for bankruptcy protection last week.

In his most recent update to the Twitter thread, Bankman-Fried also wrote that sister trading firm Alameda Research “had more assets than liabilities” month to month, “but not liquid!” He also posted that “Alameda had margin position on FTX” International.

Over the past week, the former CEO of FTX has seemed to want appear apologetic, although his explanations have been short on many details.

In one tweet from Nov. 10 Bankman-Fried posted simply “I’m sorry. That’s the biggest thing. I f*cked up, and should have done better.”

© 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.

Binance CEO Changpeng Zhao shared what he said were the six most important requirements that every centralized exchange should adopt to ensure trust in the wake of the collapse of rival exchange FTX.

The listed principles included:

1. Be risk-averse with user funds.
2. Never use native tokens as collateral.
3. Share live proof of assets.
4. Keep strong reserves.
5. Avoid excessive leverage.
6. Strengthen & Enforce Security Protocols.

“We cannot let a few bad actors sully the reputation of this industry when it’s still in its infancy,” Zhao wrote. “Our role, first and foremost, must be to protect users.”

Zhao, who said on Monday that he’s working to create an industry group to work with regulators worldwide, called on other exchanges to adopt the six proposals. Zhao also said that he was working to set up a recovery fund for projects affected by FTX’s troubles. 

© 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.