DCG And Genesis Are Scams

Market situation

The US stock market was green again yesterday. Stock futures are mostly flat. Oil price remained low at 74 USD/barrel. Gold rose slightly to 1879 USD/ounce.

Bitcoin yesterday also increased slightly to around 17,400 USD. The majority of altcoins followed suit.

At a forum discussing central bank independence, Fed chair Powell said that stabilizing prices requires making tough decisions that may not be politically unpopular. . This means that the Fed will continue to emphasize reducing inflation. Investors are most concerned about how long the Fed will keep interest rates high. Because if high interest rates are kept for a long time, it will still have a great impact on the economy.

However, the move of Well Fargo bank shows that the Fed will not turn to cut interest rates as soon as many people expect. Wells Fargo is pulling out of the trillion-dollar mortgage market amid regulatory pressure and the impact of higher interest rates. As part of its plans to cut operations, Wells Fargo is also closing its agency business that buys loans made by third-party lenders and significantly shrinking its mortgage lending portfolio. movables. They only provide this service to existing customers or a few special cases.

This is the bank with the largest market share in the mortgage lending market for real estate and wants to withdraw from this market amid regulatory pressure and the impact of higher interest rates. Wells Fargo has confidence that the Fed will continue to keep interest rates high for a long time, so it is possible that demand for this service will decrease in the near future.

The market continues to receive information about companies laying off employees. Bed Bath & Beyond has begun its latest round of layoffs, as they struggle to stay in business. The company has been on a downward spiral for a long time, and it will continue to cut another $80 million to $100 million in costs, with some of those savings coming from workforce cuts.

Coinbase is also cutting about a fifth of its workforce to preserve cash during the crypto winter. The exchange plans to cut 950 jobs in this cut. Coinbase, which had about 4,700 employees at the end of September, cut 18 percent of its workforce in June citing the need to manage costs and grow “too fast” in the bull market.

In the market, there are companies that lay off employees, there are also professions that increase hiring. Therefore, the unemployment report of the past December showed that unemployment did not increase but also decreased slightly. Although inflation has shown some signs of decreasing, unemployment is another factor affecting the Fed’s decision. Unemployment is still low, and if it hasn’t, the Fed won’t cut rates. This week, the market will receive the CPI and core CPI report. As expected, these two indexes fell from the previous month.

DCG and Genesis

After the first letter, CEO of Gemini exchange, Cameron Winklevoss sent second letter publicly available to the board of directors of DCG, Genesis’ parent company. This letter is more heavily worded than the previous one and has many accusations in it.

In this letter, Winklevoss claims Silbert and his company Genesis Global Capital intentionally defrauded more than 340,000 users of Gemini’s Earn service. According to Winklevoss, Genesis lent more than $2.3 billion to Three Arrows Capital (3AC), which resulted in a loss of $1.2 billion for Genesis after 3AC’s bankruptcy in June 2022. He claimed Silbert, DCG and Genesis had arranged arrangement by saying that DCG will process and close the $1.2 billion Genesis hole starting in July 2022 by including a 10-year note as part of its assets. Winklevoss accused Genesis CEO Michael Moro of complicity in this duplication by making “false and misleading” statements on social media about DCG funding Genesis.

Next, Winklevoss alleged that DCG’s Grayscale and 3AC had a tacit agreement through a loan between the two companies. In the letter, Winklevoss said that Grayscale lent money to 3AC in BTC. Then, 3AC used that BTC to deposit back into Grayscale in exchange for GBTC shares, thereby mortgaging GBTC as collateral to borrow Genesis money. However, by the time the market went down and the share price of GBTC dropped quite a bit compared to BTC, 3AC suffered a loss.

Before the loss, 3AC’s GBTC trading was also profitable, Winklevoss alleges that Genesis let 3AC use the profits for other purposes. This led to a loss of more than $1.2 billion for Genesis when 3AC went bankrupt.

The entire letter is accusations from one side Winklevoss, and DCG has not yet responded. However, in both letters to DCG, Winklevoss did not mention anything about Gemini’s responsibility to the Earn product and its customers using it.

Under the letter, DCG’s official Twitter account said that this is a fictitious thought and as a form of PR by Gemini exchange to push their responsibility to DCG. They added that they are continuing to work with Gemini to find a solution. If Gemini continues to have these allegations, they (DCG) will sue the exchange again.

For Thuan personally, who has used Gemini’s Earn product, this exchange does not clearly mention the service provider and ordinary people will not know about Genesis behind this product. So Gemini also has a part to play in the matter of Gemini Earn. Gemini’s letters are not really effective, but just a way to pressure and attract public opinion to DCG.

Binance and Rumors of BUSD

Yesterday, there were concerns related to the fact that the BUSD did not have enough USD as collateral.

A spokesperson for Binance stepped forward to explain this. First, BUSD on the Ethereum blockchain is fully collateralized in USD in a process overseen and issued by New York-based fintech company Paxos. However, BUSD on Binance’s own blockchain, Binance Smart Chain, is not similarly managed by an external audit firm. To ensure the legitimacy of BUSD, Binance says that the BUSD family of BUSD on the Binance Smartchain network issued by them is fully collateralized in BUSD managed by Paxos. Therefore, BUSD is kept on Binance’s own blockchains called Binance-Peg BUSD.

Because of the way this works, Binance says that there was a time when the amount of BUSD issued was not fully backed by USD. On three occasions between 2020 and 2021, the difference between the amount of Binance-Peg BUSD circulating on the Binance Smart Chain and the actual amount of BUSD believed to support it has exceeded $1 billion.

The reason for these batches is not because Binance does not have enough collateral but because the mechanism of operation involves many parties. “The process has been greatly improved recently with advanced arbitrage checks to ensure it is always locked 1-1,” they said. This story is still being followed by the market.

Update on FTX

The companies that lose money when investing in FTX continue to be updated. According to court filings, the list of famous investors who lost money while investing in the FTX exchange also includes New England Patriots owner Robert Kraft and billionaire hedge fund manager Paul Tudor Jones.

As can be seen, Sam Bankman-Fried has attracted a series of famous investors. The list has expanded to a broader pool of well-known investors and big-name financiers than was previously disclosed. FTX went through four rounds of fundraising to reach a valuation of $32 billion early last year, before finally going bankrupt in November.

Series B: July 2021

Despite being called a Series B funding round, this July 2021 fundraising round was FTX’s first external fundraising, excluding the initial investment from Binance (later withdrawn). Investors include Paradigm and Sequoia, as well as Thoma Bravo and Third Point. This round raised $900 million and valued FTX at $18 billion.

Series B-1: October 2021

Just a few months later, FTX closed its next round of funding, worth $420 million, in which many of the original Series B backers also participated. The investor list was expanded to include previously undisclosed capital from the family office of Alibaba co-founder Joe Tsai, Blue Pool, among others.

Series C: January 2022

This round comes as FTX spends hundreds of millions of dollars on advertising and sponsorship deals, it continues to seek capital by opening a Series C funding round. In January 2022, FTX closed the Series C round. valued at $400 million at a valuation of $32 billion. Below are the investors and their capital contribution ratio.

FTX US Series A: January 2022

FTX, based in the Bahamas, created FTX US to meet US regulations on cryptocurrency trading. Since then, regulators have alleged that FTX.US was only spun off from the international branch of FTX. This is FTX US’s final round of funding, which closed a $400 million funding round in January 2022 from investors including Singapore’s Temasek sovereign wealth fund and Masayoshi Son’s SoftBank Vision Fund. Previously undisclosed venture backers for the round include Kraft and Daniel Och’s family office, Willoughby Capital.

A lot of famous names but fortunately there are not many familiar names from the crypto market. Losses after the collapse of FTX continue to linger and are published with updated court records.