FTX Exploiter Dumping ETH for BTC & DCG and Genesis Contagion Worries

Daily Bullets: Monday, November 21st

Nov 21, 2022

The FTX exploiter has been busy dumping ETH for renBTC, moving holdings over to Bitcoin, and shuffling ETH to new wallets, dragging the crypto market down with it. On the contagion side, all eyes are on Genesis and parent company DCG, with rumors saying DCG owes $1B to Genesis and a lack of emergency funding could send more reverberations through the vulnerable crypto space.
Worries include that DCG and Grayscale may be forced to dissolve GBTC and ETHE trusts, which are already trading at over 40% discount. This would contribute even more selling pressure which would drag crypto down even further. Grayscale also refused to provide proof of reserves however Coinbase Custody revealed their holdings without doxxing their accounts.

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Daily Bullets: Monday, November 21st

FTX owes more than $3B to its top 50 creditors
FTX exploiter swaps ETH for renBTC, bridges to BTC then moves 195k ETH to several wallets
Digital Currency Group owes over $1.1B to Genesis
Grayscale won’t provide proof of reserves but Coinbase Custody publishes their holdings
JPMorgan registers a cryptocurrency wallet trademark
Celsius customers have until January 3, 2023 to file claims in bankruptcy proceedings
Bitcoin miner Iris Energy unplugged miners in response to a default notice on about $107.8M
SBF lawyers renounce representations citing conflict of interest
Tether conducting a chain swap to move 1B USDT from Solana to Ethereum
Uniswap collects certain on-chain and off-chain data connected to users’ crypto wallets
The Pantera Bitcoin Fund bought $137M worth of bitcoin
Mobile-first blockchain Celo partnership with ConsenSys
John Ray III, the New FTX CEO, is billing $1,300 per hour for his work
Binance Labs made a strategic investment in hardware wallet maker NGRAVE

Now for a more expanded and detailed look at the day…

Crypto News:

The FTX drainer wallet held over 250,000 ETH worth more than $300M, becoming the 27th-biggest ETH holder before dumping a large amount of ETH for renBTC and then bridging to BTC

Barry Silbert's Digital Currency Group owes over $1.1B to Genesis and lack of emergency funding may cause greater impact than FTX

Crypto investment firm Grayscale won't show proof of reserves due to “security concerns.” Crypto firms are under pressure to share information about the health of their reserves after FTX filed for bankruptcy protection. Coinbase Custody issued a statement that the digital assets of each Grayscale product have its own on-chain address, and can be confirmed on the chain, and provided the exact digital assets held in each product. Grayscale holds 635K BTC ~ $10B

JPMorgan officially registers a cryptocurrency wallet trademark

Celsius customers have until January 3, 2023 to file claims in bankruptcy proceedings

Bitcoin miner Iris Energy unplugged a large majority of its miners in response to a default notice on about $107.8M in loans they were securing

Input Output Global, the firm behind the Cardano blockchain, is releasing a new privacy-focused blockchain called Midnight and a token called dust

Man Group, the biggest publicly traded hedge fund firm, is reportedly close to starting a crypto hedge fund despite FTX collapse

The Pantera Bitcoin Fund bought $137M worth of bitcoin. 141 accredited investors participated with a minimum investment of $50,000 each

Bitcoin lender and custodian Unchained Capital plans to lay off about 15% of its employees

Mobile-first blockchain Celo partnership with ConsenSys will allow Celo to make use of Infura infrastructure

Sandwich franchise Subway trials Lightning Network payments

Economic/Government/Regulatory:

The “Razzlekhan” bitcoin laundering case will involve “classified national security information” that can only be accessed by people with security clearance

An Ohio investment manager was arrested for allegedly running a $10M cryptocurrency ponzi scheme. The U.S. CFTC had previously taken legal action against the man

Nexo is being sued by a group of investors in the London High Court who allege that the crypto firm blocked them from withdrawing over $126M worth of crypto

SEC moves to suspend sale of American CryptoFed DAO tokens

Exchange News:

FTX owes more than $3B to its top 50 creditors

FTX called on fellow crypto exchanges for help returning missing funds, pointing out that funds are being transferred to other entities through intermediate wallets

John Ray III, the New FTX CEO, is billing $1,300 per hour for his work

Paul, Weiss, the law firm backing SBF amid bankruptcy, renounced representing the entrepreneur, citing a conflict of interest. The decision to withdraw from representation after SBF’s tweets were found to disrupt the law firm’s reorganization efforts

Crypto exchange Liquid stopped trading on its platform five days after suspending withdrawals

Coinbase has added Benqi (QI) and Kava (KAVA) to its roadmap

DeFi News:

Tether conducting a chain swap to move 1B USDT from Solana to Ethereum - will reduce the total amount of circulating USDT on Solana, but the overall supply will not change

Funding for DeFi protocol Ren in limbo after Alameda collapse which was funding Ren’s development with $700,000 every quarter

Uniswap published a new privacy policy to provide transparency on the data it collects - stating that the DEX collects certain on-chain and off-chain data connected to users’ crypto wallets

Djed, Cardano's first decentralized stablecoin, will go live on the main network in January and be integrated into 40 apps

Velodrome will be distributing 4M $OP tokens over the next six months to accelerate Optimism's growth

KyberSwap partnered with Lido Finance to enhance wstETH liquidity on Ethereum

NFT/Gaming/Metaverse News:

NFT marketplace X2Y2 has flipped its decision to make creator royalties optional - was among the first to make creator royalties optional

French luxury fashion brand Givenchy the latest company to offer phygital NFTs — a physical good backed by a digital token

Scotch whisky maker Johnnie Walker has continued its Web3 push by allowing NFT holders to vote on the design of a bottle for a limited-edition drop of its top “blue label” range

Porsche unveils NFT webpage and Twitter

Fundraises:

Binance Labs made a strategic investment in hardware wallet maker NGRAVE and will lead its upcoming Series A round

Early Stage Projects:

Introducing Shuttle: an open-source package to integrate the most popular Cosmos wallets into multi-chain Dapps with just a few lines of code

LayerZero is officially live on Metis Goerli Testnet

Klaymakers22 saw over 23,000 workshop participants and 174 project submissions. 19 projects walked away with over $1M in prizes, sponsor bounty challenges, and grant and incubation opportunities

ACX token status: code complete - token launches on Monday, Nov 28

What’s your take on today’s news? Anything interesting that you have to say about these stories? Did we miss anything that should’ve been included?

Data:

TL;DR: Examining the Smart Money Holdings of WETH, WBTC, USDC and USDT in chart form.

WETH # of smart money wallets has been consistent for a while. Their holdings started falling starting in June and has recently been on a bit of a rebound

WBTC # of smart money wallets has also been consistent however their holdings have stayed in a much more confined range, not coming close to the November blowoff top.

Tether # of smart money wallets has also been consistent however their holdings are near 2021 levels

USDC # of smart money wallets has also been consistent however the recent uptrend broke and holdings have been returned to early 2022 levels

What is the Data telling you? See anything that sticks out to you?

Research/Reads:

Glassnode - Uncertainty Amongst Whales and Old Hands - source

Crypto doesn't have a UX problem - source

Reputation as Credit: Sharing Web3 game assets, permissionlessly - source

VEv2: five strategies for bringing back vote escrow - source

Papr - introduces a new way to construct lending markets - source

Have you seen our institutional-quality research?

M6 Research

Crypto Twitterverse:

vitalik.eth @VitalikButerin

Having a safe CEX: proof of solvency and beyond vitalik.ca/general/2022/1… Big thanks to @balajis and staff from @coinbase @binance @krakenfx for discussion!

vitalik.caHaving a safe CEX: proof of solvency and beyond

Ryan Selkis 🥷 @twobitidiot

I am rooting hard for DCG. Because I'm rooting for the hundreds of thousands of investors who would be hurt if Genesis, Grayscale, DCG don't execute a successful restructuring. We're all in the same boat right now.

Adam Cochran (adamscochran.eth) @adamscochran

1/18 Ok - so lets say there is an issue with DCG and they have $1bn hole and aren't getting a life line. What could they do? I decided to break down their assets, as best we can externally.

🏴∴Ergo∴🏴 @ErgoBTC

Grayscale GBTC Trust, the largest legal holder of BTC, refuses to provide any Proof of Reserve. To begin a community lead effort at transparency for the GBTC holdings, we have taken steps to ID likely GBTC addresses and balances based on public info and blockchain forensics.

degentrading @hodlKRYPTONITE

1/n - IF DCG is indeed the entity that owes 1bn to Genesis - we are fucked.

ZachXBT @zachxbt

1/ I have seen a ton of misinformation being spread on Twitter and in the news about the FTX event so let me debunk the three most common things I’ve seen “Bahamian officials are behind the FTX hack” “Exchanges know who the hacker is” “FTX hacker is trading meme coins”

AJ ( f.k.a Alfa) @alphaketchum

𝟏)𝐖𝐇𝐀𝐓 𝟐) 𝐇𝐀𝐏𝐏𝐄𝐍𝐄𝐃

Bill Ackman @BillAckman

The telephone, the internet, and crypto share one thing in common. Each technology improves on the next in terms of its ability to facilitate fraud. As such, I was initially a crypto skeptic, but after studying some of the more interesting crypto projects, I have come to

Did we miss anything or is there anything you want to discuss? We’d Love to hear your feedback and engage with the community! Feel free to leave a comment and let us know your thoughts on the Crypto market!