With Bitcoin (BTC) halving in over a year, don’t expect the crypto industry narratives to change anytime soon. Nope, crypto winter is still in full force, and the nasty headlines show no sign of abating.
This week, the parent company of Silvergate Bank announced that it would close and liquidate the crypto bank “in light of recent industry and regulatory developments.” This comes as no surprise after most of Silvergate’s high-profile partners left the firm when regulators came knocking.
The latest Crypto Biz newsletter documents the voluntary liquidation of Silvergate, a new lawsuit by Alameda Research against Digital Currency Group (DCG), and The Wall Street Journal’s “outdated” Tether allegations.
Silvergate Capital Corporation to ‘voluntarily liquidate’ Silvergate Bank
After months of uncertainty, Silvergate Bank’s parent company announced on March 8 that it would dismantle its operations and liquidate its remaining assets. While this marked another blow to the cryptocurrency industry, Silvergate Bank already had the record straight. Silvergate Bank had reportedly been negotiating with the Federal Deposit Insurance Corporation (FDIC) to avoid a shutdown. Those conversations apparently went nowhere. Like other crypto firms, Silvergate’s troubles began with the collapse of FTX and ended with regulators investigating the bank’s alleged involvement in Sam Bankman-Fried’s doomed empire. By the time Silvergate went under, companies like Coinbase, Paxos, Gemini, Galaxy Digital, and BitStamp had already cut ties.
Alameda Research files lawsuit against Grayscale for ‘self-imposed redemption ban’
Here’s a headline you probably didn’t expect: Bankrupt Alameda Research is suing Grayscale Investments and its owner, Digital Currency Group, for their exorbitant fees and refusal to unlock shareholder bailouts. The lawsuit, filed in Delaware, alleges that Grayscale collected more than $1.3 billion in management fees, allegedly violating trust agreements. The company also “made excuses” to prevent shareholders from redeeming their shares. The lawsuit seeks to “unlock $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts.” […] and obtain more than a quarter of a billion dollars in asset value for the clients and creditors of FTX debtors”. These types of accusations against DCG and Grayscale are nothing new. In January, Bitcoin billionaire Cameron Winklevoss accused DCG CEO Barry Silbert of orchestrating “a carefully crafted campaign of lies” to hide a hole in the balance sheet of a partner company.
1/ FTX CEO John Ray enters the ring.
FTX filed a lawsuit against Grayscale and its parent company.
This is a surprise.
John Ray is turning every rock, including legal challenges to Grayscale’s model, to maximize recoveries for FTX creditors.https://t.co/x1xl89B0cP
— Ram Ahluwalia, CFA CFA (@ramahluwalia) March 6, 2023
Bitcoin ASIC maker Canaan saw 82% revenue drop in Q4
In another sign of the times, Chinese Bitcoin miner and manufacturer Canaan reported a massive drop in revenue during the fourth quarter. The company’s sales plummeted 82.1% year-over-year to $56.8 million. During the quarter, Canaan sold 1.9 million terahashes per second of computing power to Bitcoin miners, down 75.8% from a year ago. In terms of profitability, Canaan was deep in the red for the quarter, reporting a loss of $63.6 million. Overall, Canaan looks healthy enough to weather a crypto winter that could last the rest of the year. The company currently has $706 million in total assets versus $67 million in liabilities.
Tether Attacks WSJ Over “Outdated Allegations” of Fake Documents for Bank Accounts
This is how you know the bear market isn’t over: The mainstream media attacks on the issuer of the stablecoin Tether show no sign of abating. If you’ve been in crypto long enough, you know that Tether is the industry’s favorite conspiracy theory because people love to question the company’s collateral, the composition of its reserves, and its association with cryptocurrency exchange Bitfinex. This week, a known Tether hater alleged that the stablecoin issuer forged documents and used shell companies to gain access to the banking system. According to The Wall Street Journal, Tether and Bitfinex falsified sales invoices and transactions as part of a ploy to open bank accounts. On the same day the report was published, Tether responded, stating that the story was based on “long outdated allegations” and was “totally inaccurate and misleading.”
I’m at PlanB’s anniversary in #lugano
So much energy and people excited to talk #Bitcoin
While on stage I heard some clown honks, sure it was WSJ.
As always tons of misinformation and inaccuracies. Poor guys, it must be hard to be them but they need better media.— Paolo Ardoino (@paoloardoino) March 3, 2023
Before you go: How will the Silvergate implosion affect cryptocurrencies?
The consequences of the FTX collapse continue to affect the crypto markets. Now, crypto lender Silvergate Bank is on the brink of insolvency after reporting a $1 billion net loss in the fourth quarter. However, that is not the worst. Several major crypto firms, including Coinbase, Circle, Paxos, Galaxy Digital, MicroStrategy, and Tether, have distanced themselves from the company as the US Department of Justice investigates their involvement in the FTX debacle. In this week’s Market Report, I sat down with analysts Marcel Pechman and Joe Hall to discuss how Silvergate could affect crypto sentiment. You can watch the full replay below.
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