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Binance CEO Changpeng Zhao said he spoke with El Salvador’s president Nayib Bukele, who denied that the Central American country had any funds on FTX’s exchange. 

“Man, the amount of misinformation is insane,” Zhao said. “I exchanged messages with President Nayib a few moments ago. He said ‘We don’t have any Bitcoin in FTX and we never had any business with them. Thank God!'”

Zhao wrote the tweet in an apparent attempt to clarify comments from Galaxy Digital CEO Mike Novogratz during a CNBC interview in which he questioned whether or not the country had exposure to FTX. Bukele has not made any comments about the troubled exchange on social media as of press time. 

El Salvador has purchased 2,381 bitcoins since it made the cryptocurrency legal tender in 2021. Unofficial estimates show the portfolio would have unrealized losses of more than 60% based on current asset prices. 

© 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.

European crypto asset trading and investment group CoinShares disclosed a $30.3 million holding currently stuck on embattled cryptocurrency exchange FTX. This is roughly equivalent to 11% of its net asset value, which was $279 million (£240.6 million) as of September. 

In a news release today, the company said it had no exposure to Alameda Research, the sister company of the exchange, and that it had been in the process of withdrawing funds from the exchange over the past week.

“Thanks to our prudent approach to risk, we had materially reduced our exposure to FTX exchange in response to increased volatility and uncertainty, ahead of FTX’s decision to freeze further withdrawals,” said CoinShare CEO Jean Marie Mognetti. 

On Tuesday, FTX halted withdrawals amid a liquidity crisis. The same day, FTX said it had agreed to be acquired by rival Binance. Wednesday, after Binance reviewed FTX’s financials, the acquisition fell through. In events that followed, other companies have disclosed their exposures to the troubled exchange. 

CoinShares said its XBT and CoinShare physical note-holders would remain unaffected in the event that its exposure was not recoverable. It holds 190 bitcoin, 1,000 ether, $25.9 million in a mixture of USD and USDC and $110,000 in other assets, according to the release. 

Mognetti said that in spite of this, the financial health of the investment group is strong. 

© 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.

Tether has frozen 46 million of USDT owned by crypto exchange FTX at the request of law enforcement.

On-chain data shows Tether has frozen a wallet address with 46,360,701 USDT ($46.3 million) on the Tron network. This address reportedly belongs to FTX.

“We are starting to receive requests from LE to temporarily freeze assets while investigation occur,” a Tether executive told CoinDesk.

This comes days after FTX stopped withdrawals, citing liquidity issues. FTX CEO Sam Bankman-Fried said today, however, that the exchange has more assets than client deposits.

© 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.

U.S. inflation is showing signs of cooling down as crypto markets remain tumultuous. 

Inflation in the U.S. came in at 7.7% in October. Based on FactSet data, analysts had predicted an 8% increase in October. The month-on-month increase was 0.4%. In September, inflation increased by 0.4% month-on-month from August. 

The Fed said last week it might slow the rate of its interest rate increases going forward. However, Fed Chair Jerome Powell did note that the eventual rate reached may be higher than initial estimates. The next Fed meeting is Dec. 14. 

source: bls.gov and federalreserve.org

Interest rate traders are now pricing in an 80% chance of a 50 basis point increase at the December meeting, according to the CME’s FedWatch tool. 

Bitcoin was trading at $17,431 in early trading, according to data via Coinbase. The leading cryptocurrency by market cap gained over 5% since the inflation data was released. Ether gained 7% in the hour since, trading at $1,295.

Crypto markets have been dominated by news of Sam Bankman-Fried’s exchange this week, after it came under scrutiny last week when a balance sheet relating to Alameda Research — a trading shop he also owns — was leaked.

The balance sheet showed significant liabilities and holdings of FTT, FTX’s exchange token. Selling pressure from Binance of FTT on Sunday increased the heat on FTX and Bankman-Fried’s trading arm. By Tuesday, Binance had entered an agreement to acquire the struggling exchange — the deal was off by Wednesday after a review of FTX’s finances.

© 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.

Sam Bankman-Fried says on Twitter: “First, one way or another, Alameda Research is winding down trading.”

He also denied online allegations of wrongdoing against the firm, writing, “They aren’t doing any of the weird things that I see on Twitter–and nothing large at all. And one way or another, soon they won’t be trading on FTX anymore.”

THIS IS A DEVELOPING STORY. 

© 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 CEO Sam Bankman-Fried apologized for the collapse of his crypto exchange, saying he is “sorry” and that he “fucked up.” 

“I’m sorry. That’s the biggest thing,” Bankman-Fried said in a tweet. “I fucked up, and should have done better.” 

FTX collapsed this week after a run on its utility token. Binance, a rival exchange, backed out of a deal to bail out the beleaguered company on Wednesday.

“I also should have been communicating more very recently. Transparently–my hands were tied during the duration of the possible Binance deal; I wasn’t particularly allowed to say much publicly. But of course it’s on me that we ended up there in the first place,” Bankman-Fried said. 

Bankman-Fried further claimed that FTX is only facing liquidity issues, implying that it’s not insolvent.

“FTX International currently has a total market value of assets/collateral higher than client deposits (moves with prices!). But that’s different from liquidity for delivery — as you can tell from the state of withdrawals. The liquidity varies widely, from very to very little,” he said.

He said he’s focusing on raising liquidity and the priority will be to make users whole before investors.

© 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.

Securities and Exchange Commission Chair Gary Gensler continued to raise red flags about the crypto industry, and responded to questions about whether his agency has failed to go after large actors in the crypto space that are violating U.S. financial laws.

“Building the evidence, building the facts, often takes time,” Gensler said, when pressed during an interview with CNBC over why the agency pursued actions against celebrity endorsers of tokens, like Kim Kardashian, while multiple company failures happened.

Gensler would not go into the specifics of FTX’s failure, citing an ongoing investigation, and made clear he did not want to comment on any specific case. But he once again called the crypto industry “largely noncompliant,” and cautioned the American public to “be careful, beware.”

“The rules and the laws are clear, but do not assume that these firms are complying with the rules and the laws” that traditional exchanges or non-crypto financial apps follow, Gensler said, when asked if everyday investors should feel safe keeping their money with crypto companies.

“This is a very interconnected world in crypto with a few concentrated players in the middle,” said Gensler, who pointed to Terra Luna’s failure as an example of “toxic combinations of lack of disclosure, customer money, a lot of leverage, meaning borrowing, and then trying to invest with that.”

“This field really needs to come into compliance,” Gensler added. “We too have limited resources. We have a $100 trillion capital market to oversee.”

© 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 Tron DAO Reserve will purchase 1 billion USDT to fight short sellers after the tether, world’s biggest stablecoin, slipped below its peg to the U.S. dollar. 

“To safeguard the overall blockchain industry and crypto market, Tron DAO Reserve will purchase a total of 1 billion USDT,” the tweet read. It added that the balance of USDD, Tron’s own stabelcoin, might be affected, and all the reserves will be in centralized exchanges. 

Tether fell 1% below its peg to the dollar earlier today amid ongoing market tumult related to crypto exchange giant FTX. Tether was trading at $0.9908 at the time of writing, according to data via Coinbase.

Furthermore, liquidity for stablecoin swaps on the Curve 3pool hit its lowest level since the luna collapse in May today. Traders continue to swap tether for other stablecoins, namely dai and USDC, which led to tether losing parity with the dollar.

Tron DAO’s buying might lead to a short squeeze, when traders that bet on a decline are forced to close their positions by buying back the underlying token. Tron deployed similar tactics in June following the TerraUSD de-peg and the ensuing market turmoil.

Paolo Ardoino, Tether’s CTO, said earlier that Tether had processed $700 million worth of redemptions in the last 24 hours. “No issues. We keep going,” he tweeted.

© 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.

Liquidity for stablecoin swaps on the Curve 3pool is now at its lowest level since the Luna collapse in May as traders continue to swap Tether’s USDT for other stablecoins, namely DAI and USDC. This has led to USDT losing its parity with the U.S. dollar amid the ongoing market tumult.

The Curve 3pool is the largest liquidity pool on the Curve decentralized exchange. This pool provides deep liquidity for swaps among the three largest stablecoins: USDT, USDC, and DAI. Under normal conditions, the pool is supposed to provide a capital-efficient means of swapping between any of the two stablecoins in the mix.

However, the fallout of the FTX collapse has upended the balance of the pool. The stablecoin reserve breakdown shows Tether’s share of the pool has risen to 86%, more than double the ideal percentage for USDT. This figure is also higher than it was during the Luna collapse when USDT accounted for 83% of the stablecoin pool.

Tether’s dominance of the pool indicates massive swaps from USDT to the other two stablecoins. Tether has lost its U.S. dollar peg as a result of traders swapping USDT for USDC. The stablecoin fell about 2.5% below peg to $0.9750 earlier in the day but has since recovered slightly to trade at $0.9907 — which is still 1% below peg — as of the time of writing.

Tether’s chief technology officer Paolo Ardoino tweeted earlier in the day that was no cause for concern. Ardoino stated that the stablecoin issuer has processed $700 million worth of redemptions in the last 24 hours.

© 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.

Solend, a lending protocol on Solana, has accrued a bad debt of more than $6 million from a large underwater position.

After a sharp fall in the price of solana (SOL) — down about 50% in the last three days — the collateral deposited in the loan fell below the borrowed sum, pushing the position underwater. 

Currently, the user that made the loan owes $8 million in USDC but only holds $2 million in SOL collateral on the platform, as a result of rapid dwindling SOL prices. This indicates a bad debt of over $6 million, Solend founder Rooter told The Block.

“The bad debt in the main pool will be covered by the treasury. Right now it’s hovering around $6 million which the treasury covers,” Rooter said.

The treasury address holds worth about $33 million in total assets, data from explorer SolanaFM show.

Under normal conditions, the loan would have been liquidated by other market participants. But liquations happened slower and in smaller chunks due to oracle issues and network congestion on Solana, according to Solend founder Rooter.

“The loan could not be fully liquidated in time due to oracle issues, which were caused by a combination of network congestion and chaotic prices on different exchanges,” Rooter explained.

The loan value was around 40 million USDC until yesterday morning. Later it shrunk as the platform kept selling the collateral to recover the 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.