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Crypto lending firm BlockFi is preparing for a possible Chapter 11 bankruptcy protection filing, according to the Wall Street Journal.

The firm also plans to conduct layoffs, the journal reported, citing people familiar with the process. 

On Monday, BlockFi said that it would continue its halt on withdrawals, citing “significant exposure to FTX and associated corporate entities.”

BlockFi signed a credit deal with FTX US earlier this year with the right to be potentially acquired. Since FTX’s collapse, BlockFi has struggled to continue business operations.

Last week, BlockFi’s founder and chief operating officer, Flori Marquez, had said on Twitter that all of the company’s products were operational and client withdrawals were being processed. Marquez had also said that BlockFi’s credit line was from FTX US and that BlockFi would be an independent entity until at least July.

California’s Department of Financial Protection and Innovation suspended BlockFi’s lending license on Friday as the state regulator investigates the crypto lender. The suspension will last for at least 30 days.

© 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.

Ripple and Binance have asked to be licensed by the Financial Conduct Authority, UK lawmakers were told on Monday.

Binance, the world’s largest crypto exchange by trading volume, is in talks with regulators at the moment, Binance Vice-President for EMEA government affairs Daniel Trinder told a hearing of the Treasury Select Committee. Ripple plans to apply for a license as the firm develops its business in the country, Head of Policy Susan Friedman said.

Ripple employs around 60 people in the UK, the committee was told. “Our current business model does not require Ripple to be registered with the FCA though as we expand our footprint in this country, which we are looking to do, we will be seeking those registrations and permissions,” Friedman said.

Binance has had several brushes with the FCA in recent years, including a June 2021 supervisory notice ordering the firm to alert users it was not permitted to undertake regulated activity in the UK. The FCA also issued a statement about Binance’s partnership with Eqonex in March this year, saying it had concerns about the exchange operator. 

With additional reporting from Inbar Preiss.

© 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.

Hosting provider Applied Digital, formerly known as Applied Blockchain, secured a $15 million loan deal with Vantage Bank Texas to expand its operations in that state.

The company has so far borrowed nearly $4.7 million, it said in a document filed with the U.S. Securities and Exchange Commission Monday.

Other companies in the mining industry have been struggling to meet debt payments, with Iris Energy recently defaulting on over $100 million in debt and Core Scientific, the biggest mining company in terms of hash rate, floating the possibility of bankruptcy.

Applied Digital’s deal includes 16 installments of up $937,500, with a 6.15% fixed interest rate. The loan matures April 2028.

The new funds will be put toward the company’s second facility, which is currently under development in Garden City, Texas and expected to reach a capacity of 200 megawatts.

The loan is secured by the leasehold interest on the Garden City facility, a security interest in assets owned by Applied Digital’s subsidiary Rattlesnake Den I, LLC (the borrower) and a security interest in the form of a collateral assignment of Applied Digital’s rights and interests in the master hosting agreements related to the facility, the filing said.

The company had closed an additional $15 million loan in July with Starion Bank in order to repay existing debt.

© 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 lending platform Salt paused withdrawals and deposits, according to a company email sent to customers.

The firm said in a message attributed to CEO Shawn Owen that “the collapse of FTX has impacted our business.” However, the full extent of the exposure was not disclosed in the message. 

“Until we are able to determine the extent of this impact with specific details that we feel confident are factually accurate, we have paused deposits and withdrawals on the SALT platform effective immediately,” Owen wrote.

Owen went on to write that the company is “working diligently with our partners to secure a clear path forward and plan to be as transparent as possible.”

Salt is the latest crypto company to reveal that it was affected negatively by the collapse of FTX, which on Friday declared bankruptcy. Numerous crypto firms, including those in the trading and markets sector, held funds on the exchange prior to its downfall. 

Salt did not immediately respond to a request for 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.

Former FTX CEO Sam Bankank-Fried returned to his ongoing, mysterious Twitter thread with the following:

a) Alameda had more assets than liabilities M2M (but not liquid!)
b) Alameda had margin position on FTX Intl
c) FTX US had enough to repay all customers

Not everyone necessarily agrees with this

© 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 Securities and Exchange Commission announced that penalties, as well as remedies to investors affected by criminal or civil wrongdoing, reached a total of $6.4 billion during the last federal fiscal year. 

The agency filed 760 enforcement actions in FY 2022, which it says represents a 9% increase from the prior year, with 462 of those being entirely new cases — a 6.5% increase year-over-year.

Today’s annual wrap-up of enforcement statistics from the last federal fiscal year does not include a breakdown of how many were crypto-related, but the agency does tout several enforcement actions or settlements from the period running between Oct. 1, 2021 and Sept. 30, 2022.

• A $100 million fine for BlockFi.
• Insider trading charges against a Coinbase product manager.
• A $5.5 million settlement with NVIDIA over what the SEC says was a lack of adequate disclosure over how crypto mining affected the company’s business, though NVIDIA did not admit to or deny the commission’s findings.
• Charges against 11 individuals in an alleged $300 million crypto Ponzi scheme.

The SEC also touted the fact that it is doubling the size of its crypto unit, adding 20 new positions to a team focused on the digital asset industry.

Crypto industry executives and advocates have been highly critical of the SEC’s approach. That includes recent skepticism over the agency’s handling of FTX and meetings between FTX executives and the SEC earlier this year.

Last week when SEC Chair Gary Gensler was pressed over why the agency had yet to take action against FTX, which primarily operated outside the U.S. despite having an American subsidiary, he responded: “Building the evidence, building the facts, often takes 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.

The backstop of the U.S. banking system reiterated in a line of questioning before the Senate that its safeguards don’t extend to crypto.

Sen. Bob Menendez, D-N.J., a senior member of the Senate Banking Committee, asked Acting Federal Deposit Insurance Corp. Chair Martin Gruenberg if FDIC insurance, which backs bank and credit union deposits in case of theft or institutional failure in the U.S., also extends to crypto firms or digital assets. 

“In fact at this time FDIC insurance does not cover cryptocurrency of any kind, is that correct?” asked Menendez. 

“That is correct,” Gruenberg, who was nominated as full chair by President Joe Biden on Monday, confirmed. 

 The collapse of FTX should be a “renewed call for Congress to take a serious look at crypto exchanges and lending platforms,” Menendez continued.

The exchange took place at a Senate Banking Committee hearing on financial oversight and referenced earlier statements from firms like FTX.US and Voyager Digital that the FDIC had called out for misrepresenting their insurance. Both firms have subsequently filed for bankruptcy protection, with customers locked out of their funds.

“The strength of the FDIC is the public’s confidence in our deposit insurance system. So if that confidence is put in question, it really puts the system at risk,” Gruenberg 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.

How much would you pay for an animated NFT statue of footballer Cristiano Ronaldo based on an iconic moment in his life? Thousands of dollars for the rarest, Binance is hoping.

The world’s biggest cryptocurrency exchange is back in the headlines again: This time not for toying with buying disgraced exchange FTX, but for embracing celebrity connections.

Following the signing of a deal between Binance and Ronaldo’s CR7 this summer, the company is planning the first in a series of Ronaldo-themed NFT drops for Nov. 18, just days before the World Cup kicks off in Qatar.

Different NFTs will entitle holders to different perks, among them mystery boxes, entry into giveaways, and a personal message from Ronaldo. It’s not quite the one-on-one zoom call that Anthony Hopkins offered in his recent NFT drop, but details of perks for future Ronaldo-themed NFT collections coming out in 2023 have not been revealed.

Binance was previously critical of partnerships between crypto companies and celebrities, albeit in a rather tongue-in-cheek manner. Ahead of the Super Bowl in February, it ran an ad warning against celebrities advertising crypto featuring celebrity and NBA star Jimmy Butler.

The exchange said it chose celebrities for its own campaign that were known for their honesty and independence.

The collapse of FTX has revived focus on the sports celebrity partnerships accrued by the exchange in recent times.

Among the FTX brand ambassadors were NFL quarterback Tom Brady, NBA champion Shaquille O’Neal, Golden State Warriors star Stephen Curry, tennis star Naomi Osaka, Jacksonville Jaguars quarterback Trevor Lawrence, Los Angeles Angels pitcher Shohei Ohtani and Udonis Haslem of the Miami Heat.

The terms of each deal with FTX are not known, though it’s been reported that at least Brady, Curry, Ohtani and Osaka received equity stakes in the company. 

© 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.

Senate Banking Committee Chair Sherrod Brown, D-Ohio, is sounding the alarm on crypto following FTX’s collapse. 

“This year we’ve seen cryptocurrency values collapse by $2 trillion. 2,000 billion dollars,” Brown said at the opening of a hearing with top U.S. banking regulators. “The parallels to past financial crises throughout our history are troubling.”

“We’ve seen them used for speculation and fraud, scams, sanctions evasion, outright theft – there doesn’t seem to be anything beneficial or useful that hundreds of speculative cryptocurrencies can be used for,” Brown continued, noting the partisan split on the industry’s reception. “Many on my side of the aisle have raised warning flags about this. The last thing we need is for risky new financial products to crash our financial system. Thank you those of you on the panel for your skepticism about cryptocurrencies.”

Brown has been critical of the industry in the past, but cast today’s remarks in the context of the recent collapse of FTX. 

Brown’s Republican counterpart, Sen. Pat Toomey, R-Penn., pushed back on this sentiment in his line of questioning.

“The insinuation was that they might have the ability to crash our financial system,” Toomey said. “It’s fundamentally not about the kind of assets held at FTX, it’s about what individuals did with those assets.” 

Toomey drew a comparison to MF Global’s bankruptcy. “Nobody suggested that the problem was the instruments that were used. The problem was the use of customer funds.”

© 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.

Leading global banks kicked off a 12-week pilot together with the New York Federal Reserve. 

The project was first reported by The Block. 

The so-called regulated liability network will serve as a ground for participants to experiment with wholesale digital asset transaction and settlements. The project will only use simulated data, the New York Fed said.

“This theoretical [financial market infrastructure] provides a multi-asset, always-on, programmable infrastructure containing digital representations of central bank, commercial bank, and regulated non-bank issuer liabilities, denominated in U.S. dollars,” the statement said.

The USDF Consortium, a trade group promoting the use of tokenized deposits and transactions by banks, praised the project. 

“Tokenizing deposits and other regulated liabilities can bring blockchain innovation into the real economy while maintaining the numerous protections afforded by banking regulation and ensuring that banks can continue to provide access to credit,” the group’s CEO, Rob Morgan, said in a statement. “This can help lower the cost of payments, ensuring that consumers have real time access to their funds. It can also create efficiencies that can lower the cost of credit and expand access.”

Partners on the digital dollar pilot as part of the New York Fed’s innovation center include BNY Mellon, Citigroup, HSB Holdings, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank and Wells Fargo & Co.

The international payment system, SWIFT, will provide an interoperable infrastructure. Deloitte will provide advisory services, and Sullivan & Cromwell LL will provide legal advice.

In addition to the announcement of the regulated liability network today, the New York Fed also has an ongoing cross-border digital dollar project.

© 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.