Category: News

By Luc Cohen

NEW YORK (Reuters) – A car drove into a metal barricade outside Sam Bankman-Fried’s home in California, his lawyers said on Thursday, in a recent incident they said underscores the security risks faced by the FTX founder and those ensuring his return to court.

In a filing in Manhattan federal court, lawyers for the 30-year-old onetime billionaire said three men got out of the car and told a security officer guarding the Palo Alto home, “You won’t be able to keep us out.” The men, who have not been identified, then got back in the car and drove away.

Bankman-Fried, arrested last month on fraud and conspiracy charges related to the collapse of the cryptocurrency exchange, is under house arrest at his parents’ home until his Oct. 2 trial. Prosecutors say he stole billions of dollars of FTX customer funds to plug losses at his hedge fund.

He has pleaded not guilty.

The lawyers, Mark Cohen and Christian Everdell, did not specify when the incident took place, describing it only as recent.

The lawyers brought up the incident in response to a push by major media outlets, including Reuters, to make public the names of two people who helped guarantee Bankman-Fried’s bond alongside his parents, both Stanford Law School professors who put up their house as collateral for the $250 million bond.

The news organizations argued last week that the right of the public to know the two sureties’ identities outweighed their privacy and safety rights. Bankman-Fried’s lawyers said the media groups “assign far too much weight to the presumption of access” and ignored the safety of the guarantors.

“Given the notoriety of this case and the extraordinary media attention it is receiving, it is reasonable to assume that the non-parent sureties will face significant privacy and safety concerns if their identities are disclosed,” Cohen and Everdell wrote in their letter to U.S. District Judge Lewis Kaplan.

Prosecutors took no position on whether to disclose the sureties’ identities or not, Bankman-Fried’s lawyers wrote in the filing. A spokesman for the U.S. Attorney’s office in Manhattan declined to comment.

Prosecutors interviewed and approved the two individuals on Jan. 4, Cohen and Everdell wrote. They proposed that the two additional sureties post bonds of $500,000 and $200,000, respectively. The sum represents the amount they will be liable to pay if Bankman-Fried does not show up in court.

(This story has been refiled to remove an extraneous apostrophe after billionaire in paragraph 2)

(Reporting by Luc Cohen in New York; Editing by William Mallard, Robert Birsel)

(Reuters) – The lending unit of crypto firm Genesis filed on Thursday for U.S. bankruptcy protection from creditors, toppled by a market rout along with the likes of exchange FTX and lender BlockFi.

Genesis Global Capital, one of the largest crypto lenders, froze customer redemptions on Nov. 16 after FTX stunned the financial world with its bankruptcy, fuelling concern that other companies could implode. The company is owned by venture capital firm Digital Currency Group (DCG).

Genesis’ lending unit said it had both assets and liabilities in the range of $1 billion to $10 billion in its filings with the U.S. bankruptcy court.

Genesis’s bankruptcy filing is the latest in a cascade of crypto failures and steep job cuts triggered by plunging prices last year.

(Reporting by Tom Hals in Wilmington, Delaware and Akanksha Khushi; Editing by Lananh Nguyen and Clarence Fernandez)

By Chris Prentice

NEW YORK (Reuters) – Nexo Capital Inc has agreed to pay $45 million in penalties to settle charges from the U.S. Securities and Exchange Commission and state regulators that the crypto firm failed to register its crypto asset lending product, the SEC said on Thursday.

Nexo has agreed to pay a $22.5 million penalty to the SEC and another $22.5 million in fines to state regulators in relation to its Earn Interest Product to U.S. investors, the SEC said in a statement.

Nexo began to offer its lending product around June 2020, allowing U.S. investors to give their crypto assets to the company in exchange for a promise of interest, the SEC said. The company ceased offering the product to new investors after the SEC announced similar charges against another company in February 2022.

The UK-based crypto lender said last month it would phase out its U.S. products and services over the coming months due to clashes with regulators.

Nexo did not admit or deny the SEC’s findings.

The securities regulator has been targeting such offerings by crypto firms over the last year, bringing its first charges against a subsidiary of BlockFi Inc for selling a similar product in February 2022.

Last week, the SEC sued Genesis Global Capital LLC and Gemini Trust Company LLC for their lending product.

(Reporting by Chris Prentice in Washington; Editing by Matthew Lewis)

(Reuters) – Bankrupt crypto exchange FTX is looking into the possibility of reviving its business, Chief Executive Officer John Ray told the Wall Street Journal on Thursday.

Ray, who took over the reins in November, has set up a task force to explore restarting FTX.com, the company’s main international exchange, he said in an interview with the WSJ.

The CEO also told the Journal that he would look into whether reviving FTX’s international exchange would recover more value for the company’s customers than his team could get from simply liquidating assets or selling the platform.

FTX’s native token FTT surged nearly 30% after the report.

“I’m glad Mr. Ray is finally paying lip service to turning the exchange back on after months of squashing such efforts!” FTX founder and former CEO Sam Bankman-Fried said in a tweet.

“I’m still waiting for him to finally admit FTX US is solvent and give customers their money back,” Bankman-Fried added.

A legal representative for FTX did not immediately respond to a Reuters request for comment.

Bankman-Fried has been accused of stealing billions of dollars from the exchange’s customers to pay debts incurred by his crypto-focused hedge fund, Alameda Research. He has pleaded not guilty to fraud charges.

The future of customer funds, however, remains unclear. Earlier this week, FTX said in a report to creditors that hackers stole about $415 million in crypto from its international and U.S. exchanges since its bankruptcy in November.

(Reporting by Niket Nishant in Bengaluru; Editing by Shailesh Kuber and Anil D’Silva)

(Reuters) – Crypto outlet CoinDesk Inc is exploring a full or partial sale of its business and has hired investment bank Lazard Ltd to lead the process, the media company’s chief executive said on Wednesday.

The crypto industry is going through one of its worst phases, with prices of major tokens at two-year lows and a string of bankruptcy filings from top players.

“My goal in hiring Lazard is to explore various options to attract growth capital to the CoinDesk business, which may include a partial or full sale,” CEO Kevin Worth told Reuters in a statement.

The development comes amid an industry turmoil, which began with the crash of stable coins TerraUSD and Luna early last year.

More recently, top crypto exchange FTX filed for bankruptcy, while publicly traded Coinbase Global Inc laid off a fifth of its workforce after slashing over 1,000 jobs last year.

New York-based CoinDesk launched in 2013 to track Bitcoin, but the platform has emerged as a key source of news and pricing benchmarks for the entire range of crypto currencies.

The company is wholly owned by crypto-focused venture capital firm Digital Currency Group, which also has interest in Coinbase, according to its website.

(Reporting by Yuvraj Malik in Bengaluru; Editing by Subhranshu Sahu)

By Paritosh Bansal and Divya Chowdhury

DAVOS, Switzerland (Reuters) – In the snow and ice on the main drag in Davos, the impact of the crypto winter is plain for WEF attendees to see.

Last May, the dressed-up shop fronts that line both sides of the Promenade street running through the Swiss ski resort were dominated by crypto firms, rolling in bitcoin.

Now there are just a handful and the executives who have made it to Davos have swapped their hoodies for blazers, despite sub-zero temperatures outside.

Some of those from the digital industry which have set up shop on the fringes of the World Economic Forum (WEF) annual meeting were quick to distance themselves from cryptocurrencies.

“I hope there’s an increased focus on utility value and practical applications of the technology, and less focus on retail investors chasing meme coins,” Jeremy Allaire, CEO of USDC stablecoin issuer Circle, said.

“There was a lot of nonsense,” Allaire told the Reuters Global Markets Forum.

Former Reserve Bank of India Governor Raghuram Rajan believes last year’s plunge in digital assets allows investors to focus on the true value of the technology.

“We’re at the right place now in terms of crypto,” he said.

Executives in Davos said they are now all about blockchain technology, proper controls and regulation, and the promise of disruption that it holds for financial services and beyond.

“We are an infrastructure, plumbing play. We build infrastructure today for digital assets, which is crypto. Tomorrow it will be different assets,” said Dmitry Tokarev, chief executive of Copper, which provides custody services.

“I would question some of the stuff that I saw, ‘What is the return on that?'” Tokarev added, referring to the big presence of crypto companies at the last WEF meeting, which was unusually held in May as a result of the COVID-19 pandemic.

“We have been always ignoring the noise. All our partners were here last year. They are here this year,” Tokarev added.

The world of digital assets has changed drastically since May, with the value of the crypto market plummeting and some of the major crypto companies going under as investors pulled back from riskier assets in the face of rising interest rates.

The market capitalization of crypto currencies has shrunk by $1.4 trillion, a third of its value from peaks hit in late 2021 and some of the best-known crypto firms are under stress or have gone under, including the collapse of crypto exchange FTX.

“There is a place for trading use cases but they cannot be the singular focus, we need to move to more real use cases and put attention there,” said Denelle Dixon, CEO of Stellar Development Foundation, which supports the Stellar blockchain.

‘DODGED A BULLET’

While interest remains in the technology, the conversation is turning to responsibility.

Colm Kelleher, chairman of Swiss bank UBS, told a WEF panel that blockchain technology will help reduce costs for banks. But he said the industry needed to figure out the basics, such as anti-money laundering controls.

“We kind of dodged a bullet,” Kelleher said, noting that the collapse in the value of crypto currencies had not caused systemic problems. “We did have investors who did want to invest in coinage. And we had to draw a line on what was suitable for those investors,” he added.

Yat Siu, co-founder of Hong Kong-based blockchain gaming developer Animoca Brands, was supportive of the firms in Davos.

“These are companies with serious cash positions and revenue generating companies,” Siu said. “They’re billion dollar enterprises.”

Crypto is trying to establish its presence, SkyBridge Capital founder Anthony Scaramucci said, adding “there’s nothing more establishment than the World Economic Forum.” Scaramucci maintains a bullish stance on crypto despite losses last year.

Back on the Davos Promenade, some signs of crypto’s lost swagger endure.

Parked right outside a pavilion promoting blockchain early in the week was a bright orange Mercedes.

On the hood, instead of the carmaker’s insignia was a copper-colored symbol for bitcoin.

The tires carried a slogan in white: “In Bitcoin we trust”.

(Additional reporting by Lananh Nguyen in Davos, Stefania Spezzati and Lisa Mattackal; Editing by Alexander Smith)

By Daphne Psaledakis, Raphael Satter and Chris Prentice

WASHINGTON (Reuters) – U.S. authorities said on Wednesday they have arrested the majority shareholder and cofounder of Hong Kong-registered virtual currency exchange Bitzlato Ltd for allegedly processing $700 million in illicit funds.

Anatoly Legkodymov, a Russian national living in China, was arrested in Miami on Tuesday on charges that he operated the exchange as an unlicensed money exchange business that “in his own words, catered to ‘known crooks,'” a top Justice Department official said.

Prosecutors said Bitzlato exchanged more than $700 million in cryptocurrency with Hydra Market, which they described as an illicit online marketplace for narcotics, stolen financial information, fraudulent identification documents and money laundering services that U.S. and German law enforcement shut down in April 2022.

“Whether you break our laws from China or Europe or abuse our financial system from a tropical island — you can expect to answer for your crimes inside a United States courtroom,” Deputy Attorney General Lisa Monaco told reporters at a news conference at the Justice Department.

Bitzlato also received more than $15 million in ransomware proceeds, prosecutors said. It was not immediately possible to contact Hydra Market for comment.

“Despite it being a small name, it carries a lot of weight,” said Chen Arad, the chief operating officer at Solidus Labs, a crypto market surveillance company.

“Small actors are not safe and they carry just as much risk as any big-name exchange (or) platform,” he said.

Authorities described Legkodymov as the cryptocurrency exchange’s cofounder, saying the 40-year-old Russian helped run the company from the Chinese city of Shenzhen. Legkodymov did not immediately respond to an email with questions, and messages left on Bitzlato’s automated Telegram support chat service were answered with the phrase, “Oops, sorry.”

Bitzlato has processed $4.58 billion worth of cryptocurrency transactions since May 3, 2018, prosecutors said, adding a substantial portion constitutes “the proceeds of crime.”

It also broke rules requiring significant vetting of customers and failed to meet requirements aimed at preventing money laundering, authorities said. Archived versions of Bitzlato’s website noted that the site’s clients could register using “only your email.”

Prosecutors said Bitzlato knowingly serviced U.S. customers and conducted transactions with U.S.-based exchanges using U.S. online infrastructure. For at least some period of time, it was being managed by the defendant while he was in the United States, they said.

The charges were filed in conjunction with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which said it has prohibited certain transmittals of funds involving Bitzlato by any covered financial institution after labeling Bitzlato Ltd a “primary money laundering concern” related to Russian illicit finance.

“Identifying Bitzlato as a primary money laundering concern effectively renders the exchange an international pariah,” Deputy Treasury Secretary Wally Adeyemo said at the news conference.

Adeyemo said Bitzlato has repeatedly facilitated transactions for Russian-affiliated ransomware groups, including the gang behind Conti, which he said has links to the Russian government and Russia-connected darknet markets.

Cari Stinebower, a former Treasury Department official now a partner at law firm Winston & Strawn, said the penalties imposed are akin to those under Section 311 of the U.S. Patriot Act and will make Bitzlato untouchable by U.S. and foreign banks.

“None of the mainstream financial institutions will deal with an entity identified as a primary money laundering concern,” she said.

“While U.S. financial institutions will refuse to engage in business with Bitzlato, (one would expect that) other financial institutions will follow suit,” she added. “The impact will be to freeze Bitzlato out of the global financial sector almost immediately.”

By midday Wednesday, Bitzlato’s website was replaced by a notice saying that the service had been seized by French authorities “as part of a coordinated international law enforcement action.”

(Reporting by Daphne Psaledakis, Raphael Satter, Kanishka Singh, Chris Prentice and Arshad Mohammed; additional reporting by Hannah Lang; Writing by Chris Prentice; Editing by Megan Davies and David Gregorio)

By Chris Prentice and Hannah Lang

NEW YORK/WASHINGTON (Reuters) – A top official with the U.S. Commodity Futures Trading Commission (CFTC) on Wednesday plans to warn lawmakers against allowing cryptocurrency exchanges to self-certify with the agency to list products for trading.

The CFTC already allows self-certification for exchanges to list contracts for other products, such as commodities. Lawmakers were considering a similar process as part of proposed crypto legislation being hammered out last year.

But CFTC Commissioner Christy Goldsmith Romero said the process would open the door to “regulatory arbitrage” as some crypto assets are likely securities that need to be overseen by a different agency, the Securities and Exchange Commission (SEC).

“Oversight is necessary to prevent abuse” of the process, she said, according to remarks prepared for an event at the University of Pennsylvania.

Her warnings come as lawmakers regroup to draft legislation to better oversee the troubled crypto industry, which had a wave of bankruptcies last year and continues to reel from FTX’s sudden collapse and alleged fraud.

Romero also raised questions about the level of due diligence firms conducted before investing in FTX, suggesting there could be incentives “to turn a blind eye” to red flags in a competitive market.

Federal prosecutors have brought charges against three of FTX’s former top executives, accusing them defrauding investors and misappropriating customer funds.

The SEC is also probing FTX investors’ due diligence, according to two sources familiar with the inquiry.

In order to regain the public’s trust following the FTX meltdown, the crypto industry should enshrine strong corporate governance and increase the roles that gatekeepers like lawyers and compliance professionals play at companies, Goldsmith Romero said.

“Gatekeepers should have seriously questioned the operational environment at FTX in the lead-up to its meltdown,” she said.

(Reporting by Chris Prentice; Editing by Josie Kao)

WASHINGTON (Reuters) – The U.S. Justice Department will “announce a major, international cryptocurrency enforcement action” on Wednesday, it said in a statement, adding the U.S. Treasury Department will also make an announcement.

“The U.S. Department of the Treasury will also announce an action in this space,” the statement said.

U.S. officials, including Deputy U.S. Attorney General Lisa Monaco and Deputy U.S. Treasury Secretary Wally Adeyemo, will deliver remarks at 12 p.m. (1700 GMT) in Washington, according to the statement.

Other officials will include the associate deputy director of the FBI and the U.S. attorney for the Eastern District of New York.

Representatives for Treasury declined to comment further.

(Reporting by Daphne Psaledakis and Susan Heavey, editing by Paul Grant and Chizu Nomiyama)

(Reuters) – FTX founder Sam Bankman-Fried in a blog post refuted some claims made by the company’s lawyers on Tuesday, saying that they were “extremely misleading” and that FTX U.S. was and is solvent.

(Reporting by Juby Babu in Bengaluru; Editing by Sandra Maler)

(Reuters) – Cryptocurrency lender Genesis Global Capital is planning to file for bankruptcy as soon as this week, Bloomberg News reported on Wednesday, citing people with knowledge of the situation.

A bankruptcy filing has been expected for weeks, after the company froze customer redemptions on Nov. 16 following the downfall of major cryptocurrency exchange FTX.

The collapse of FTX in November has claimed several victims including crypto lender BlockFi and Core Scientific Inc, one of the biggest publicly traded crypto mining companies in the United States, both of which filed for bankruptcy protection in the following months.

Genesis, its parent Digital Currency Group and creditors have exchanged several proposals, but have so far failed to come to an agreement, the Bloomberg report said, adding that Kirkland & Ellis and Proskauer Rose have been advising groups of creditors.

Genesis did not immediately respond to a Reuters request for comment.

Genesis is also locked in a dispute with Gemini, founded by the identical twin crypto pioneers Cameron and Tyler Winklevoss.

Gemini offered a crypto lending product called Earn in partnership with Genesis, and now says Genesis owes it $900 million in connection with that product.

The U.S. Securities and Exchange Commission last week said it had charged Genesis and Gemini with illegally selling securities to hundreds of thousands of investors through their crypto lending program.

(Reporting by Niket Nishant and Mehnaz Yasmin in Bengaluru; Editing by Sriraj Kalluvila)

LONDON (Reuters) – UBS Chairman Colm Kelleher said traditional finance firms were “systemically safe” after years of increased regulation, but guardians of global financial markets had further to go to eradicate the risks posed by the non-banking sector.

“Regulators have – with respect – taken their eyes off the ball in terms of the non-banking sector,” the chairman of Switzerland’s largest bank said during a panel discussion at the World Economic Forum in Davos, referring to a category of loosely supervised finance firms.

“Banks and insurance companies are well regulated. They’re systemically safe, we can argue,” he added.

The world’s biggest banks have emerged largely unscathed from months of turmoil in the nascent cryptocurrency sector, which has toppled several major crypto investors, lenders and exchanges.

“I think we’ve dodged a bullet because this thing blew up very quickly but it will come back in one form or another,” he said.

“We are looking for the regulatory framework that will allow us to accommodate that for our clients.”

(Reporting by Stefania Spezzati and Sinead Cruise; Editing by Bernadette Baum)

(Reuters) – Semafor is planning to buy out FTX founder Sam Bankman-Fried’s roughly $10 million investment in the news startup, the New York Times reported on Wednesday, citing the company’s chief executive officer.

“We are planning to repurchase Sam Bankman-Fried’s interest in Semafor and to place the money into a separate account until the relevant legal authorities provide guidance as to where the money should be returned,” said Semafor’s CEO Justin Smith, according to the NYT report.

The news outlet did not immediately respond to a Reuters request for comment.

The U.S. Department of Justice accused Bankman-Fried of causing billions of dollars of losses related to FTX, which a U.S. prosecutor called a “fraud of epic proportions.”

Bankman-Fried founded FTX in 2019 and rode a boom in the values of bitcoin and other digital assets to become a billionaire several times over as well as an influential donor to U.S. political campaigns.

In December, non-profit investigative news outlet ProPublica said, in a staff memo, it will return $1.6 million it received from Bankman-Fried’s family foundation.

(Reporting by Manya Saini in Bengaluru; Editing by Shailesh Kuber)

(Reuters) – Cryptocurrency exchange Coinbase Global Inc on Wednesday said it will halt operations in Japan due to volatile market conditions.

All Coinbase Japan customers will have until Feb. 16 to withdraw their fiat and crypto holdings, the company said in a blog post.

(Reporting by Jyoti Narayan in Bengaluru; Editing by Savio D’Souza)

By Dietrich Knauth

(Reuters) – Bankrupt crypto exchange FTX said in a report to creditors on Tuesday that about $415 million in cryptocurrency had been stolen in hacks.

FTX has said it had recovered over $5 billion in crypto, cash and liquid securities, but that significant shortfalls remained at both its international and U.S. crypto exchanges. FTX attributed some of the shortfall to hacks, saying that $323 million in crypto had been hacked from FTX’s international exchange and $90 million had been hacked from its U.S. exchange since it filed for bankruptcy on Nov. 11.

Indicted founder Sam Bankman-Fried later challenged aspects of the company’s report in a blog post.

Bankman-Fried, who has been accused of stealing billions of dollars from FTX customers to pay debts incurred by his crypto-focused hedge fund, Alameda Research, pushed back against FTX’s calculations late Tuesday, saying that the company’s lawyers at Sullivan & Cromwell had presented an “extremely misleading” picture of the company’s finances.

Bankman-Fried said FTX has more than enough money to repay U.S. customers, whom he says are owed between $181 million and $497 million based on his “best guess.” Bankman-Fried has not had access to FTX records since stepping down as CEO in November.

A spokesperson for Sullivan and Cromwell declined to comment. Attorneys at the firm said in a recent court filing that they have rebuffed Bankman-Fried’s efforts to stay involved in the company’s bankruptcy proceedings.

Bankman-Fried has pleaded not guilty to fraud charges, and he is scheduled to face trial in October.

FTX did not provide an estimate of the amount owed to FTX’s U.S. or international customers, and it did not immediately respond to questions about Bankman-Fried’s blog post.

FTX provided some additional details about its recovery efforts on Tuesday, saying it had recovered $1.7 billion in cash, $3.5 billion in liquid cryptocurrency and $300 million in liquid securities.

“We are making progress in our efforts to maximize recoveries, and it has taken a Herculean investigative effort from our team to uncover this preliminary information,” Ray said in a statement.

The crypto assets recovered to date include $685 million in Solana, $529 million in FTX’s proprietary FTT token and $268 million in bitcoin, based on crypto prices on Nov. 11, 2022. Solana, which was lauded by Bankman-Fried, lost most of its value in 2022.

During FTX’s initial investigation into hacks of its system, it uncovered a November asset seizure by the Securities Commission of the Bahamas, which led to a dispute between FTX’s U.S.-based bankruptcy team and Bahamian regulators.

The two sides settled their differences in January, and Ray said on Tuesday that the Bahamian government was holding $426 million for creditors.

Bahamas Prime Minister Philip Davis referenced the dispute during a Tuesday event at the Atlantic Council in Washington, saying Ray’s team had “come around” and accepted that the Bahamian asset seizure “was appropriate and perhaps has saved the day for many of the investors in FTX.”

(Reporting by Dietrich Knauth in New York; Juby Babu in Bengaluru; and Jasper Ward in Washington; Editing by Noeleen Walder, Amy Stevens, Matthew Lewis and Gerry Doyle)

By Hannah Lang

(Reuters) – Silvergate Capital Corp reported a net loss of $1 billion in the fourth quarter, after reporting earlier this month that investors spooked by the collapse of crypto exchange FTX pulled out more than $8 billion in deposits in the last three months of 2022.

Shares of the bank were last up more than 10% as the bank attempted to reassure investors that it remained committed to serving the digital asset industry.

“We are in the process of evaluating our product portfolio and customer relationships with a focus on profitability,” said Silvergate Chief Executive Alan Lane on a conference call with analysts on Tuesday.

The bank will offboard certain customers separate from its core business in the coming weeks, and will eliminate certain products like digital asset custody that have become “too costly or complex,” Lane added.

The crypto-focused bank had previously announced it would cut its workforce by 40%, or about 200 employees, as it tries to rein in costs amid a deepening crypto downturn.

Silvergate had released a preliminary earnings report on Jan. 5, in which it reported total deposits from digital asset customers declining to $3.8 billion at the end of December, compared to $11.9 billion at the end of September. The company sold $5.2 billion of debt securities at a loss of $718 million in the fourth quarter to maintain liquidity.

The dire earnings report shows the extent of the impact on the digital asset industry from the downfall of crypto exchange FTX, which filed for bankruptcy in November after failing to cover customer withdrawals, marking a stunning reversal of fortunes for what was one of the world’s biggest crypto exchanges.

Silvergate had said earlier it had no outstanding loans or investments in FTX, but its shares have shed nearly 60% of their value since the exchange’s meltdown, which sparked a wild crypto sell-off.

Slowing the expansion of its business, La Jolla, California-based Silvergate also said earlier this month it would delay the launch of a blockchain-based payment solution it had purchased from Meta Platforms Inc-backed Diem Group last year.

The bank said it would take an impairment charge of $196 million in the fourth quarter on assets purchased for the payment solution venture.

Founded in 1988, Silvergate ventured into crypto in 2013. The bank counts major exchanges like Coinbase Global Inc and Kraken among its customers.

The bank had also operated a mortgage warehouse business, but announced in December that it would be winding down that division, citing the rising interest rate environment and reduction in mortgage volumes. Company filings show that the bank received $4.3 billion in advances from the Federal Home Loan Bank of San Francisco in the fourth quarter.

(Reporting by Hannah Lang in Washington; Editing by Andrea Ricci)

By Nell Mackenzie

LONDON (Reuters) – Hedge funds trading crypto currencies tracked by index provider BarclayHedge ended 2022 down almost 50%, the research firm said on Tuesday, a sign that the collapse of the cryptocurrency exchange FTX continues to ripple through the industry.

FTX filed for Chapter 11 bankruptcy protection in the United States in November following its spectacular collapse that sent shivers through the industry.

Ben Crawford, head of research at BarclayHedge, said since FTX fell to pieces, the conversation around trading crypto currencies had become polarised and that “true believers” in crypto were “cranking up their evangelizing to 11.”

“The more skeptical voices have turned to openly wondering if the ‘Crypto Winter’ isn’t a season at all, but a state more akin to a nuclear winter,” said Crawford.

An index of 47 hedge funds, the names of which BarclayHedge keeps anonymous, posted a loss of over 47% for the year, the data said.

But the 2022 result was not the worst performance the index has seen in the last five years. The Cryptocurrency Traders Index ended 2018 down over 60%, said BarclayHedge, which is part of the company Backstop Solutions.

However, the average 5-year performance of the index if an investor was able to hold to their position would have been over 46%, BarclayHedge data said.

(Reporting by Nell Mackenzie; Editing Yoruk Bahceli, William Maclean)

By Medha Singh and Lisa Pauline Mattackal

(Reuters) – Bitcoin is on the charge in 2023, dragging the crypto market off the floor and electrifying bonk, a new meme coin.

The No.1 cryptocurrency has clocked a 26% gain in January, leaping 22% in the past week alone, breaking back above the $20,000 level and putting in on course for its best month since October 2021 – just before the Big Crypto Crash.

Ether has also risen, by 29% this year, helping drive the value of the overall global cryptocurrency market above $1 trillion, according to CoinGecko.

“After a rough year last year for cryptos, we are seeing a form of mean reversion,” said Jake Gordon, analyst at Bespoke Investment Group, referring to the theory of asset prices returning to long-term averages.

Researchers said investor bets on a rosier macroeconomic picture were driving a jump in riskier assets across the board.

Few crypto tokens have benefited more than bonk, which was launched at the end of December on the Solana blockchain and had rocketed 5,000% by early January. It has since fallen back, though remains up 910% since the start of the year.

It is the latest entrant to the hyper-volatile world of meme coins, cryptocurrencies inspired by online memes and jokes, and is modeled after the same grinning Shiba Inu dog as dogecoin – which itself was catapulted to fame by Elon Musk tweets.

Bonk’s a puppy, though.

Even at its peak it was worth just $0.000004873759 with a market capitalization of about $205 million.

Other meme tokens are also up, with dogecoin and Shiba Inu up 19% and 27% respectively in 2023.

But buyers beware.

“Investors need to be especially cautious when it comes to coins like doge, Shiba Inu and bonk,” said Les Borsai, co-founder of digital assets services firm Wave Financial.

“They fall just as hard as they surge.”

Nonetheless, some market players pointed to the relative cheapness of these tokens – doge is worth about eight cents – as a reason why speculators were willing to place bets on them.

“Meme coins belong to crypto, it’s part of the culture,” said Martin Leinweber, digital assets product specialist at MarketVector Indexes. “It just takes a few lines of codes to create a meme token and if you have a community for it, people love that.”

RUMORS OF SOL’S DEATH EXAGGERATED

Bonk is a meme coin with a mission. It was created, in part, to support the Solana blockchain, which has seen an exodus of funds and users since crypto exchange FTX filed for bankruptcy in November, and its native Solana token drop over 37%.

The Solana token has now indeed jumped as bonk has gained traction: it’s up 131% in 2023, the biggest gainer among major cryptocurrencies.

“Rumors of Solana’s death seem to have been greatly exaggerated,” said Tom Dunleavy, senior research analyst at data firm Messari. “Despite the recent price appreciation seemingly being driven by speculation, the underlying ecosystem remains quite strong.”

Graphic: Crypto comeback https://www.reuters.com/graphics/FINTECH-CRYPTO/WEEKLY/klvygzqylvg/chart.png

TOO EARLY TO CALL A CRYPTO REVERSAL

Some researchers chalked the crypto gains up to optimism that inflation had peaked, reducing the need for tighter central bank policy.

“Bitcoin and crypto tend to front-run everything, which is why we’ve seen notable relative strength in this asset class of late,” said Wave Financial’s Borsai.

There’s certainly been an increase in activity.

The dollar value of bitcoin trading volumes on major exchanges over a 7-day period jumped to $151 million, the highest in nearly two months, according to data from Blockchain.com.

Total bitcoin flows – representing all uses including trading and payments – have increased by 13,130 bitcoin on average in the last 7 days, the largest rise in 64 days, Chainalysis data showed.

However, market watchers warned against celebrating too soon, noting trading volumes remained low and the macroeconomic environment uncertain.

“It’s too early to declare a definitive reversal for the crypto market despite the recent strength we’ve seen of late,” said Aaron Kaplan, co-founder of Prometheum, a digital asset securities trading platform.

“If interest rate increases are below what the market expects, then risk assets will benefit and crypto prices will likely continue the uptrend, but there’s just too much uncertainty right now.”

(Reporting by Medha Singh and Lisa Mattackal in Bengaluru; Editing by Pravin Char)

By Divya Chowdhury and Lisa Pauline Mattackal

DAVOS, Switzerland (Reuters) – SkyBridge Capital is betting on a sustained turnaround in cryptocurrency markets in 2023, the firm’s founder Anthony Scaramucci said, while admitting this view was “overly bullish”.

“If bitcoin could trade back to $35,000, SkyBridge is going to have an amazing year,” Scaramucci told the Reuters Global Markets Forum in Davos, Switzerland.

January’s crypto rally could be sustained as 2023’s “halving”, when the number of new bitcoins released is cut in half, will constrain supply and drive prices higher, he said.

Bitcoin is trading at around $20,800, a 26% gain so far this year after falling by more than 64% in 2022.

SkyBridge has invested in bitcoin, ethereum, solana and altcoin algorand, and is also eyeing the structured credit market to drive 2023 returns after the firm’s losses in 2022.

“Structured credit, mortgage-backed securities, credit card debt, auto loans — that’s an attractive space again,” Scaramucci said. As of last September, his firm managed $2.2 billion, including $800 million in digital asset-related investments.

Scaramucci confirmed that SkyBridge hopes to buy back a 30% stake from FTX before the middle of the year, but the timeline is uncertain as the cryptocurrency exchange’s bankruptcy process unfolds, he said.

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(Reporting by Divya Chowdhury in Davos; Additional reporting by Nishara Karuvalli Pathikkal in Bengaluru; Editing by Alexander Smith)

(Reuters) – Bitcoin rose 5.58% to $21,044 at 2344 GMT on Saturday, adding $1,113 to its previous close.

Bitcoin, the world’s biggest and best-known cryptocurrency, is up 27.6% from the year’s low of $16,496 on Jan 1.

Ether, the coin linked to the ethereum blockchain network, surged 7% to $1,552.6 on Saturday, adding $101.6 to its previous close.

(Reporting by Maria Ponnezhath in Bengaluru, editing by Deepa Babington)