Tag: Ignore

(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.

(Join GMF, a chat room hosted on Refinitiv Messenger: )

(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)

(Reuters) – Bitcoin rose 5.54% to $19,897 at 22:13 GMT on Friday, adding $1,044 to its previous close.

Bitcoin, the world’s biggest and best-known cryptocurrency, is up 20.6% from the year’s low of $16,496 on Jan. 1.

Ether, the coin linked to the ethereum blockchain network, rose 2.98% to $1,458.8 on Friday, adding $42.2 to its previous close.

(Reporting by Siddharth Jindal in Bengaluru; Editing by Chris Reese)

By Luc Cohen and Jody Godoy

NEW YORK (Reuters) – Several FTX employees have turned to law firm Covington & Burling to help them deal with questions from U.S. authorities investigating the collapse of the cryptocurrency exchange and actions by its founder Sam Bankman-Fried, three people familiar with the matter told Reuters.

Arlo Devlin-Brown, a New York-based Covington partner and former Manhattan federal prosecutor, is acting as so-called pool counsel representing current FTX employees as individuals being asked to share information with prosecutors and regulators, said the people, who spoke on the condition of anonymity.

Companies facing wide-ranging investigations often hire pool counsel for employees. The use of pool counsel suggests that federal prosecutors in Manhattan probing FTX’s collapse may be interested in questioning a deep roster of employees.

Bankman-Fried, 30, was arrested in December on charges of stealing customer funds to plug losses at his hedge fund, Alameda Research, and lying to investors and lenders.

The one-time billionaire pleaded not guilty. Two close associates pleaded guilty and agreed to cooperate with prosecutors. Damian Williams, the top federal prosecutor in Manhattan, has urged others with knowledge of wrongdoing to come forward.

“It’s nerve-wracking to participate in an interview with the FBI and the U.S. Attorney’s office, regardless of your personal exposure,” said Sarah Krissoff, a former federal prosecutor in Manhattan and now a partner at Day Pitney.

Employers pay for pool counsel, which represents employees who tend not to have significant exposure to criminal charges themselves, but may be unnerved by the process of speaking with authorities, Krissoff explained.

The use of pool counsel enables a single legal team to gain expertise in the case, making it more efficient than having each employee retain individual lawyers, Krissoff said. She added that pool counsel must be swift to identify potential conflicts among their clients and urge individuals to find their own attorneys when appropriate.

The arrangement does not mean Covington is representing FTX, which has turned to Sullivan & Cromwell, another law firm.

FTX declared bankruptcy on Nov. 11 after a wave of customer withdrawals spurred by concerns the exchange had commingled funds with Alameda.

Many former FTX executives, including its former top lawyer Daniel Goldberg, have hired their own lawyers to guide them through the process of potentially cooperating with prosecutors.

Reuters could not determine how many FTX employees are being represented by Covington, nor what information – if any – the employees have provided to prosecutors, the Securities and Exchange Commission or the Commodity Futures Trading Commission, which are all investigating.

Spokesmen for Covington, Bankman-Fried and the U.S. Attorney’s office in Manhattan all declined to comment. FTX did not respond to a request for comment.

Devlin-Brown joined Covington in 2016 following nearly 11 years at the U.S. Attorney’s office in Manhattan. As a member of the office’s securities and commodities fraud unit he prosecuted Steven Cohen’s hedge fund SAC Capital Advisors, which pleaded guilty to insider trading.

He was later promoted to chief of the office’s public corruption unit, where he oversaw the cases against former top New York State legislators Sheldon Silver and Dean Skelos, who were convicted on corruption charges.

FTX is now run by corporate restructuring expert John Ray, who oversaw the liquidation of Enron. Ray has met with prosecutors, sources told Reuters in December.

In a Nov. 17 statement filed in bankruptcy court, Ray wrote that FTX needed employees to stay on to help “establish accountability, preserve value and maximize stakeholder recoveries.”

(Reporting by Luc Cohen and Jody Godoy in New York; Additional reporting by Angus Berwick in London and Dietrich Knauth in New York; editing by Amy Stevens and David Gregorio)

By Elizabeth Howcroft

LONDON (Reuters) – Chinese crypto entrepreneur Justin Sun is willing to spend $1 billion of his own funds on buying assets belonging to Digital Currency Group (DCG), the parent company of embattled crypto lender Genesis, Sun told Reuters.

Genesis froze customer withdrawals in November and said it was trying to avoid a bankruptcy filing. It owes its creditors more than $3 billion, according to a person familiar with the matter.

Genesis’ owner, DCG, is also the parent company of several high-profile crypto firms, including crypto asset manager Grayscale, and its website lists more than 160 companies in its venture capital portfolio. DCG is considering offloading parts of that portfolio to raise money, the Financial Times reported on Thursday.

Sun told Reuters in an interview he would be willing to spend up to $1 billion to buy some of DCG’s assets, “depending on their evaluation of the situation”.

Sun did not specify which assets he was considering buying.

His spokesperson did not disclose details of Sun’s wealth, but said it consisted of crypto and traditional currencies.

Digital Currency Group declined to comment.

Sun is the founder of a blockchain network called TRON and an advisor to the crypto exchange Huobi, which last week announced plans to lay off about 20% of its staff.

High-profile crypto players have in the past publicly expressed interest in buying other firms or their assets when there were market concerns about those firms’ financial health, but such deals do not necessarily materialize.

When major crypto exchange FTX faced a rush of investor withdrawals in November, Binance said it had signed a no-nbinding agreement to buy FTX’s non-U.S. unit. A day later Binance said it dropped the plan after doing due diligence.

As FTX sought emergency funding, Bloomberg reported that Sun said he was prepared to provide “billions” in aid. That deal also did not take place.

(Reporting by Elizabeth Howcroft; Editing by Tomasz Janowski)

(Reuters) – Singapore-based crypto exchange Crypto.com said on Friday it had decided to reduce global workforce by approximately 20%.

The announcement comes after Coinbase Global Inc said on Tuesday it would cut about 950 jobs, or 20% of its workforce, as part of a restructuring plan.

(Reporting by Rhea Binoy in Bengaluru; Editing by Rashmi Aich)

By Elizabeth Howcroft

LONDON (Reuters) – Illicit use of cryptocurrencies hit a record $20.1 billion last year as transactions involving companies targeted by U.S. sanctions skyrocketed, data from blockchain analytics firm Chainalysis showed on Thursday.

The cryptocurrency market floundered in 2022, as risk appetite diminished and various crypto firms collapsed. Investors were left with large losses and regulators stepped up calls for more consumer protection.

Even as overall crypto transaction volumes fell, the value of crypto transactions related to illicit activity rose for the second year running, Chainalysis said.

Transactions associated with sanctioned entities increased more than 100,000-fold in 2022 and made up 44% of last year’s illicit activity, Chainalysis said.

Funds received by the Russian exchange Garantex, which was sanctioned by the U.S. Treasury Department in April, accounted for “much of 2022’s illicit volume”, Chainalysis said, adding that most of that activity is “likely Russian users using a Russian exchange.” A spokesperson for Chainalysis said wallets are tagged as “illicit” if they are part of a sanctioned entity.

Garantex did not immediately respond to an emailed request for comment.

The United States also imposed sanctions last year on cryptocurrency mixing services Blender and Tornado Cash, which it said were being used by hackers, including from North Korea, to launder billions of dollars worth of proceeds from their cyber crimes.

The volume of stolen crypto funds rose 7% last year, but other illicit crypto transactions including those related to scams, ransomware, terrorism financing and human trafficking, saw volumes fall.

“The market downturn may be one reason for this,” Chainalysis said. “We’ve found in the past that crypto scams, for instance, take in less revenue during bear markets.”

Chainalysis said its $20.1 billion estimate only includes activity recorded on blockchain, and excludes “off-chain” crime such as fraudulent accounting by crypto firms.

The figure also excludes when cryptocurrencies are the proceeds of non-crypto-related crimes, such as when cryptocurrency is used as a means of payment in drug trafficking, Chainalysis said.

“We have to stress that this is a lower bound estimate – our measure of illicit transaction volume is sure to grow over time,” the report said, noting that the figure for 2021 was revised to $18 billion from $14 billion as more scams were discovered.

(Reporting by Elizabeth Howcroft; Editing by Tomasz Janowski)

By Chris Prentice and Hannah Lang

NEW YORK/WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission (SEC) on Thursday said it has charged Genesis Global Capital LLC and Gemini Trust Company LLC with illegally selling securities to hundreds of thousands of investors through their crypto lending program.

Genesis, a part of Digital Currency Group, entered into a deal with Gemini in December 2020 to offer Gemini customers the chance to loan their crypto assets to Genesis in exchange for earning interest, the SEC said. Beginning in February 2021, they raised billions of dollars’ worth of crypto assets from investors, the SEC said.

The firms violated securities laws through the offer and sale of crypto assets through their Gemini Earn product, the SEC said.

In December 2022, Genesis told investors they could not withdraw their crypto assets as volatility in the crypto markets prompted a liquidity crunch. At the time, Genesis had about $900 million in assets from 340,000 investors. The investors have been unable to withdraw their assets, the regulator said.

Investigations into other, related violations are ongoing, the agency said.

In February 2022, a subsidiary of rival crypto firm BlockFi Inc. agreed to pay $100 million to the SEC and 32 states to settle charges related to their offering of a similar interest-bearing product.

(Reporting by Chris Prentice and Hannah Lang; Editing by Daniel Wallis)

By Jonathan Stempel and Luc Cohen

NEW YORK (Reuters) – Eight major media outlets on Thursday asked the U.S. judge overseeing Sam Bankman-Fried’s criminal case to make public the names of two people who helped guarantee the FTX cryptocurrency exchange founder’s $250 million bond.

Saying the public interest “cannot be overstated,” lawyers for the outlets, including Reuters, said the public’s right to know Bankman-Fried’s guarantors outweighed their privacy and safety rights.

In a letter to U.S. District Judge Lewis Kaplan in Manhattan, the lawyers distinguished the case from another judge’s December 2020 decision not to reveal who guaranteed a bond for British socialite Ghislaine Maxwell, then accused and later convicted of aiding in financier Jeffrey Epstein’s sex crimes.

“While Mr. Bankman-Fried is accused of serious financial crimes, a public association with him does not carry nearly the same stigma as with the Jeffrey Epstein child sex trafficking scandal,” lawyers for the outlets wrote.

Media seeking to identify Bankman-Fried’s sureties also include the Associated Press, Bloomberg, CNBC, Wall Street Journal publisher Dow Jones, the Financial Times, Insider and the Washington Post. The New York Times has asked separately for the names.

A spokesman for Mark Cohen and Christian Everdell, who represent Bankman-Fried, declined to comment. Cohen and Everdell also represented Maxwell in her criminal case.

In seeking to keep the sureties’ names under wraps, Bankman-Fried’s lawyers said their client’s parents, who co-signed the $250 million bond, had been harassed and received physical threats since FTX’s early November collapse and bankruptcy.

The lawyers said there was “serious cause for concern” the additional sureties might suffer similar treatment if their names went public.

Bankman-Fried has pleaded not guilty to criminal charges that he looted billions of dollars at FTX, in part by diverting customer deposits to support his Alameda Research hedge fund, buy real estate, and make political donations.

His parents, Joseph Bankman and Barbara Fried, are Stanford Law School professors. Bankman, who has not been accused of wrongdoing, has hired his own lawyer in the case, according to a person familiar with the matter.

(Reporting by Jonathan Stempel and Luc Cohen in New York; editing by Jonathan Oatis)

(Reuters) – Bitcoin rose 6% to $19,005 at 21:04 GMT on Thursday, adding $1,075 to its previous close.

Bitcoin, the world’s biggest and best-known cryptocurrency, is up 15.2% from the year’s low of $16,496 on Jan. 1.

Ether, the coin linked to the ethereum blockchain network, rose 3.06% to $1,432.8 on Thursday, adding $42.6 to its previous close.

(Reporting by Siddharth Jindal in Bengaluru; Editing by Chris Reese)

By Chris Prentice, Angus Berwick and Luc Cohen

(Reuters) – The father of FTX founder Sam Bankman-Fried has retained a New York attorney in recent weeks, a source familiar with the matter told Reuters, as prosecutors probe Bankman-Fried’s alleged cryptocurrency fraud scheme.

Joseph Bankman, a tax law professor at Stanford Law School, has tapped Sean Hecker of Kaplan Hecker and Fink LLP, the source said.

Hecker, who focuses on white collar crime, previously represented a former top foreign exchange trader at Barclays accused of an alleged multi-billion-dollar fraud scheme. In a rare move, a federal judge tossed out that case immediately after prosecutors presented it.

Bankman had closely advised his son ever since Bankman-Fried launched his hedge fund Alameda Research in 2017, according to three former FTX executives. In his later consulting work for FTX, Bankman helped arrange meetings in Washington for his son, the sources said.

Bankman is cooperating with prosecutors, the source said, without elaborating. Reuters could not determine what information, if any, Bankman had given prosecutors. A spokesperson for Bankman declined to comment for this article. Bankman could not be reached for comment by phone and email.

While it is unclear if prosecutors view Bankman as having any personal liability in the alleged fraud scheme, the scrutiny of the case highlights that the net of individuals caught up in the FTX scandal is wide. Bankman-Fried, who was arrested and released on bail, has pleaded not guilty to fraud charges and is due to go to trial in October.

A spokeperson for the DOJ declined to comment about Bankman.

The Justice Department, Securities and Exchange Commission and Commodity Futures Trading Commission filed charges against Bankman-Fried last month. He is accused of diverting billions of dollars in FTX client deposits to Alameda to bankroll venture investments, luxury real estate purchases, and political donations.

He clinched a bail deal with prosecutors late last month that saw him released from jail in exchange for a $250-million bond, secured against his parents’ property. The deal required Bankman-Fried to remain in confinement with Bankman and his mother Barbara Fried at their home in Palo Alto, California.

Two other former top associates, former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang, have both pleaded guilty to defrauding investors and agreed to cooperate.

Bankman was closely involved at Alameda and FTX, the former executives said. In 2017, he personally recruited Daniel Friedberg, who became FTX’s long-time top lawyer, one of the people said. Reuters reported last week that Friedberg had cooperated with prosecutors. He also accompanied Bankman-Fried in the Bahamas in early November while his son tried to secure emergency funding.

Both Bankman-Fried’s parents, as well as senior executives of the failed crypto exchange, bought properties in the Bahamas over the last two years, Reuters has previously reported. At the time, a spokesperson for the two said only that they had been trying to return the property to FTX.

Bankman’s spokesperson declined to comment when asked about the status of those properties.

(Reporting by Angus Berwick in London and Chris Prentice and Luc Cohen in New York; Editing by Megan Davies and Anna Driver)

By Luc Cohen

NEW YORK (Reuters) – Sam Bankman-Fried said he did not steal money and blamed the collapse of his now-bankrupt FTX exchange on a broad crash in cryptocurrency markets, in a highly unusual blog post on Thursday, a month after his arrest on U.S. fraud charges.

Federal prosecutors in Manhattan last month said Bankman-Fried stole billions of dollars from FTX customers to pay debts for his crypto-focused hedge fund, Alameda Research, purchase lavish real estate, and donate to U.S. political campaigns.

He has pleaded not guilty.

“I didn’t steal funds, and I certainly didn’t stash billions away,” Bankman-Fried wrote in the blog published on Substack, in a rare public statement by a U.S. criminal defendant.

Defense lawyers typically advise clients to stay silent before trial because prosecutors may use their comments against them in court. His trial is scheduled to start on Oct. 2, 2023.

A spokesman for Bankman-Fried declined to comment.

In the post, Bankman-Fried did not directly address many of the other charges brought against him by federal prosecutors in Manhattan last month, namely that he misled investors and lenders about the financial conditions of FTX and Alameda.

He wrote that Alameda failed to hedge against an “extreme” crash in the crypto markets, which ultimately came to pass last year.

“As Alameda became illiquid, FTX International did as well, because Alameda had a margin position open on FTX,” Bankman-Fried wrote.

The 30-year-old onetime billionaire also said FTX’s U.S. wing is “fully solvent” and that its international unit has many billions of dollars in assets.

“If it were to reboot I believe there is a real chance that customers could be made substantially whole,” he wrote.

Last month, two of his closest associates pleaded guilty to defrauding the trading platform’s customers and agreed to cooperate with prosecutors’ investigation.

Caroline Ellison, Alameda’s former chief executive, said in her plea hearing that Bankman-Fried and other FTX executives received billions of dollars in secret loans from Alameda.

Bankman-Fried was released on a $250 million bond in December and put under house arrest at his parents’ Palo Alto, California home, which was pledged as collateral for his return to court.

(Reporting by Luc Cohen in New York; editing by Amy Stevens and Himani Sarkar)

By Nelson Renteria

SAN SALVADOR (Reuters) – El Salvador, which became the first country in the world to recognize bitcoin as a legal tender two years ago, approved on Wednesday a law that would regulate the issuance of other digital assets by both the state and private entities.

The bill, backed by ruling party lawmakers allied with President Nayib Bukele, aims to attract national and foreign investors while creating new financing opportunities for citizens, companies and the government.

Lawmakers in the unicameral Congress dominated by Bukele’s New Ideas party passed the proposal in an overwhelming majority vote of 62 in favor and only 16 opposed.

“The purpose of this law is to establish the legal framework that grants legal certainty to transfer operations to any title of digital assets used in public issuance offers,” according to the legislation.

Public offerings may be made by issuers using existing digital assets, with the opportunity to create new ones through them, the law indicates.

The law also establishes the creation of the National Commission for Digital Assets and the Bitcoin Funds Administration Agency, which will be in charge of managing, safeguarding, and investing the funds from public offerings of digital assets carried out by the government.

The provisions of the law are not applicable to digital currencies issued by central banks of any country or territory, whether so-called fiat currency issued by those banks or crypto-currencies.

It also would not apply to digital assets that by law are legal tender such as bitcoin, in addition to the video game ecosystem or Non-Fungible Tokens.

Bukele’s office did not immediately respond to a request for comment asking whether the new legislation would apply to the launch of bitcoin volcano bonds that the president announced in late 2021.

Nonetheless, President Bukele shared on Twitter a message from the country’s bitcoin office saying the law also paves the way for volcano bonds to be issued soon.

(Reporting by Nelson Renteria; Editing by Ana Isabel Martinez; editing by Diane Craft)

By Dietrich Knauth and Tom Hals

NEW YORK/WILMINGTON, Del. (Reuters) – Crypto exchange FTX has recovered more than $5 billion but the extent of customer losses in its collapse is still unknown, an attorney for the bankrupt company founded by Sam Bankman-Fried said on Wednesday.

The company, which was valued a year ago at $32 billion, filed for bankruptcy in November and U.S. prosecutors accused Bankman-Fried of orchestrating an “epic” fraud that may have cost investors, customers and lenders billions of dollars.

“We have located over $5 billion of cash, liquid cryptocurrency and liquid investment securities,” Andy Dietderich, an attorney for FTX, told a U.S. bankruptcy judge in Delaware at the start of Wednesday’s hearing.

Dietderich also said that the company plans to sell non-strategic investments that had a book value of $4.6 billion.

However, Dietderich said the legal team is still working to create accurate internal records and the actual customer shortfall remains unknown. The U.S. Commodities Futures Trading Commission has estimated missing customer at more than $8 billion.

Dietderich said the $5 billion recovered does not include assets seized by the Securities Commission of the Bahamas, where Bankman-Fried was located.

FTX’s attorney estimated the seized assets were worth as little as $170 million while Bahamian authorities put the figure as high as $3.5 billion. The seized assets are largely composed of FTX’s proprietary and illiquid FTT token, which is highly volatile in price, Dietderich said.

SELLING AFFILIATES

FTX’s legal team was in court on Wednesday to seek approval for procedures to sell affiliates LedgerX, Embed, FTX Japan and FTX Europe. FTX also wants approval from U.S. Bankruptcy Judge John Dorsey in Delaware to keep customer names secret for at least six months.

FTX’s founder, Sam Bankman-Fried, 30, was indicted on two counts of wire fraud and six conspiracy counts last month in Manhattan federal court for allegedly stealing customer deposits to pay debts from his hedge fund, Alameda Research, and lying to equity investors about FTX’s financial condition. He has pleaded not guilty.

The four companies FTX intends to sell are relatively independent from the broader FTX group, and each has its own segregated customer accounts and separate management teams, according to FTX court filings.

The crypto exchange has said it is not committed to selling any of the companies, but that it received dozens of unsolicited offers and plans to hold auctions beginning next month.

The U.S. Trustee, a bankruptcy watchdog that is part of the Department of Justice, has opposed selling the affiliates before the extent of the alleged FTX fraud is fully investigated.

In addition to selling affiliates, a company lawyer on Wednesday said FTX will end its seven-year sponsorship deal with the League of Legends video game, which started in 2021.

Bankman-Fried has acknowledged shortcomings in FTX’s risk management practices, but the one-time billionaire has said he does not believe he is criminally liable.

In addition to customer funds lost, the collapse of the company has also likely wiped out equity investors.

Some of those investors were disclosed in a Monday court filing, including American football star Tom Brady, Brady’s former wife supermodel Gisele Bündchen and New England Patriots owner Robert Kraft.

(Reporting by Dietrich Knauth in New York and Tom Hals in Wilmington, Del.; Editing by Alexia Garamfalvi,l Matthew Lewis and Mark Porter)