updraftplus domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131hustle domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131wpforms-lite domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home/aonyeani76/cryptocurrencypanther/wp-includes/functions.php on line 6131While the current subject of the probe into Silvergate Bank appears speculative at this time, there is a deep tie between the financial institution and FTX.
The shares of American financial services giant Silvergate Capital Corp (NYSE: SI) have plunged by 13.16% to $18.21 in the Pre-Market after reports emerged that the firm’s banking unit is under probe by the United States Department of Justice (DoJ).
As reported by Bloomberg, the US DoJ’s fraud unit is in charge of the investigations and the regulators seek to explore whether the firm had any fraudulent relationship with the bankrupt FTX derivatives exchange. Per the report, no indictment has been brought against the company at this time.
Specifically, the regulators are digging into the hosting of accounts tied to Sam Bankman-Fried’s businesses. According to sources who asked not to be named, the inquiry is still in its earliest stages and there is no likelihood that any charges will be brought on the company at this time.
As a crypto-based bank, Silvergate has experienced significant headwinds owing to the crypto winter. With declining revenues and general devaluation, the pressures on the company are growing and the news of the probe is bad optics for the firm. As one of the firms with the biggest exposure to FTX, the bank recorded a $1 billion loss in the previous quarter.
Silvergate also buckled under the weight of its high operations cost in the previous quarter as it shed off as much as 40% of its staff.
As the current probe progresses, the insight prosecutors will be looking out for from Silvergate will relate to what it knows about the allegedly extended fraud scheme by FTX to defraud investors. FTX’s implosion and the operational management of the platform appeared like a coordinated scheme that took a bad early turn.
While the current subject of the probe into Silvergate Bank appears speculative at this time, there is a deep tie between the financial institution and FTX. Alameda Research, FTX’s sister firm opened an account with the bank as far back as 2018. At the time, the main FTX exchange had not been established.
With the collapse of both firms, Silvergate Bank has revealed that it followed due diligence at the time when it onboarded them. The bank also said it continued monitoring the activities of the exchange following the initial onboarding.
One major strong backing Silvergate is leaning on since FTX collapsed is because it adheres to core banking laws. Silvergate is constantly being audited by regulators and independent auditors and no impropriety has been discovered thus far.
Despite the exposure to FTX, the bank said it has about $4.6 billion in cash and cash equivalents at the end of 2022. Depending on how the DoJ probe on the relationship between Silvergate Bank and FTX turns out, the firm will need to do everything it can to rebuild investor confidence.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
Since Three Arrows Capital (3AC) filed for bankruptcy, the troubled hedge fund’s co-founders have come forward to recount its sad demise.
3AC co-founders Su Zhu and Kyle Davies told Bloomberg about their companies’ difficulties in an interview. While their current locations remain unknown, the interview hinted at their presence in Dubai. Zhu and Davies trace their relationship back to high school before co-founding what one of the largest crypto funds was once.
A court filing in 3AC’s bankruptcy case was published on July 18. The publishing shows the size of the company’s enormous debt obligations, owing $3.5 billion to 27 different companies, including $2.3 billion to digital currency lender Genesis Global Trading.
Reportedly, Zhu and Davies have received death threats over the past few weeks following the decision by a judge in the British Virgin Islands to order 3AC to sell its assets and file for bankruptcy sometime in June.
In a 1,157-page affidavit, creditors argued that “3AC is insolvent and should be wound up.” The affidavit filing took place in a British Virgin Islands court. “Its management cannot be trusted to retain any remaining assets for the benefit of creditors.”
The Singapore High Court has helped shed light on Three Arrows Capital’s bankruptcy through a leaked 1000-page document. Per the document, a few of the company’s creditors allege that Zhu and Davies cut all communication with them after they presented them with legal charges demanding their attention. The duo of 3AC officials seems pressured to step out and tell their narrative of the whole matter.
Beyond ignoring creditors, Zhu and Davies had also allegedly made a down payment on a US$50 million yacht. According to the filing, the yacht is set for delivery in Italy by around September.
Vitalik Buterin, the co-founder of Ethereum, commented on the yacht purchase allegation in June. He tweeted, “there are far more honorable ways to burn $50m to impress people than buying a super yacht.”
Teneo, a liquidator appointed by the court, also published the bankruptcy filing on 3acliquidation.com on July 18. Although not fast enough, the liquidator took down the post as the document was already downloaded, reposted elsewhere, and went viral.
Per the report, Davies wanted the yacht to be more impressive than those belonging to Singapore’s richest billionaires. The filing also cites creditors requesting to see whether Zhu and his wife used company funds to acquire two Good Class Bungalows in Singapore for $35 million and $21 million, respectively. The filing refers to these bungalows as rare and expensive mansions.
Things started going sideways for Three Arrows Capital around April 2022. During this time, reports came in about 3AC spending between $200 and $600 million purchasing LUNA. According to the filing, the investment took place at an inopportune time because in early May, the algorithmic stablecoin, TerraUSD, started to wobble from its dollar peg. The wobbling was a sign that the stablecoin’s parent company and its associated crypto were running out of funds. This was Terraform Labs and Luna cryptocurrency.
Luna’s price dropped from $80 to a few cents following the currency’s system collapse on May 12. The filing records that on the same day, Davies and another employee from 3AC reportedly told creditors that the hedge fund did not have “too much” exposure to Terra’s downfall.
By mid-June, U.S.-based lenders BlockFi and Genesis complained that 3AC could not make margin calls. Margin calls refer to a situation where a broker demands that an investor commits more funds to cover potential losses. The two lenders started liquidating some of 3AC’s assets in retaliation.
The same goes for Voyager, who also reported 3AC for defaulting on a $646 million loan. Then, 3AC defended that it was unaware of its exposure to the Terra-Luna crash. Speaking to Wall Street Journal, Davies said in June that the Terra-Luna situation caught them very much off guard.
Over the past several weeks, Voyager and Celsius filed for Chapter 11 bankruptcy.
Based in Singapore, Three Arrows capital was once among the largest and most prominent funds globally. It managed more than $10 billion before the ill-timed investment in the Luna coin prompted investors to demand their funds back. This ultimately compelled the company to file for Chapter 15 protection while sending 3AC founders on the run from a swarming group of creditors and regulators.
During the long interview with Bloomberg, Zhu and Davies revealed that they had underestimated the market by leveraging their long holdings to achieve maximum exposure to what they anticipated would be a crypto Supercycle.
Unfortunately, when the unprecedented crumple of the Terra ecosystem happened, 3AC firm took a $600 million hit on its financial sheet, marking the company’s inevitable collapse. With the Terra crash rattling the entire cryptocurrency market, a series of sell-offs soon followed, together with liquidations. This threatened the other assets of Three Arrows Capital.
Some market players followed 3AC’s leveraged long position on staked ETH, hoping to force liquidation and drive down prices.
Three Arrows Capital’s Grayscale Bitcoin Trust (GBTC) arbitrage transaction lost its Bitcoin holdings once GBTC’s premium became a discount. With Bitcoin falling below the peak of its previous cycle during mid-June, the purported “risk-free” transactions drove 3AC to the brink of a collapse. The risk-free transactions used to be the firm’s primary revenue source.
The conversation with Bloomberg also focused on Zhu and Davies trying to clear their names of many claimed misdoings. As the company battled bankruptcy, the two executives denied claims that they had been evasive with the creditors’ communication attempts.
Citing Su Zhu, “We have been communicating with them from day one.” Further, Zhu commented on the claims that he and Davies had used their private accounts to hide cash from liquidators. He said, “People may refer to him as dumb, idiot or crazy, And I’ll accept that. Maybe,” he said. “But they’re going to say that I ran away with funds during the last period, where I put more of my money back in. That’s not true.”
It may take months and years before 3AC and its creditors can reach an understanding. However, Zhu and Davies have given voice to their desire to help resolve the situation in every possible way.
The Three Arrows Capital case with creditors impacts the entire crypto business. Following the firm’s failure to make payments, reports over the past month confirm that Genesis Trading had financed 3AC with more than $2.36 billion. Not just that, BlockFi, Voyager Digital, and Celsius are all suffering big losses and facing liquidations.
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