US Senate Hearing to Discuss FTX, New York Bans Proof-of-Work and FTX Valuates Its Assets: Hodler's Digest, Nov. 20-26

Digital asset lending company BlockFi announced Nov. 28 that it had filed for Chapter 11 bankruptcy in New Jersey. Among other things, the bankruptcy filing revealed that BlockFi intends to restructure and retain certain employees. BlockFi has eight subsidiaries that are also included in the bankruptcy filing. Subsequent news revealed details of the bankruptcy proceedings, including BlockFi's attorney reporting that $355 million of the organization's capital was frozen on FTX.

In a settlement with the United States Office of Foreign Assets Control (OFAC), US crypto exchange Kraken will be fined about $362,000 for violating sanctions on Iran. According to comments from Marco Santori, Kraken's Chief Legal Officer, the company itself reported the breach to OFAC. Kraken allegedly allowed its exchange to be used by participants based in Iran and did not have a proper system for banning specific IP addresses. The company has agreed to provide $100,000 for sanctions compliance measures as part of the settlement, in addition to the $362,000 fine.

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FTX headlines keep rolling as events unfold. FTX's bankruptcy case has prompted the US trustee handling the case to request an independent auditor to investigate the details of FTX's demise. Another headline revealed that bank accounts held by sister company Alameda Research were reportedly being used for FTX client fund activity without the exchange working directly with a bank. FTX was also the subject of a December 1 meeting of the US Senate Committee on Agriculture, Food and Forestry. Additionally, Bahamian authorities are investigating FTX.

Binance continued to work to increase transparency regarding its reserves. The crypto exchange hired Mazars, an auditing firm known for retaining former US President Donald Trump as a long-time client, to conduct its Proof-of-Reserves (PoR) audit. Mazars and the Trump family split in 2022. In another development related to the PoR audit, Binance recently moved large amounts of cryptocurrencies, raising concerns in the crypto community.

Three Arrows Capital liquidators are having trouble getting in touch with Su Zhu and Kyle Davies, the hedge fund's founders. During a virtual hearing in the Southern District Bankruptcy Court of New York, attorneys representing the liquidators said the founders had not worked with them in recent months, despite being active on social media. Zhu and Davies are believed to be currently based in Indonesia and the United Arab Emirates, where foreign court orders are difficult to enforce.

Winner and Loser

"If you're Brazilian or from Venezuela or Argentina, it becomes much easier to understand the power of a decentralized currency."

"DeFi-centric platforms simply cannot fall victim to shady business practices because 'code is law' applies to them."

"We definitely noticed more people buying bitcoin due to the FTX crash."

"I think Apple has sort of emerged as the only company trying to unilaterally control what apps get on a device, and I don't think that's a sustainable or a good place to be."

"Sure, I've made a lot of mistakes or things I'd give anything to do again."

forecast of the week

Bitcoin spent some time above $17,000, although the asset has bounced above and below the level several times over the past few days, according to Cointelegraph's BTC price index.

Earlier in the week, pseudonymous digital asset analyst il Capo Of Crypto tweeted that BTC could face danger if the asset falls below $16,000. "If it goes below 16,000, it teleports to 12,000-14,000," the analyst said Nov. 28.

The article also mentioned other notable factors and analysis, including the potential importance of the monthly candle close in November.

FUD of the week

A third unexpected death recently rocked the crypto space. Vyacheslav Taran, the 53-year-old billionaire and Russian president of the Libertex group, died in a helicopter crash on November 25, an official Libertex statement confirmed. Taran also founded Forex Club and has been involved in several crypto endeavors. The helicopter flight from Switzerland to Monaco had only Taran and the pilot on board, both of whom died in the crash. Amber Group co-founder Tiantian Kullander, 30, and MakerDAO co-founder Nikolai Mushegian, 29, also both died unexpectedly in November and October, respectively.

Joshua David Nicholas has been sentenced to approximately four years in prison for his involvement in EmpiresX, a $100 million crypto Ponzi operation. Nicholas acted as the chief trader for the system and claimed to promise profits based on the bot trading, when the operation was actually a Ponzi scheme, misusing customer funds. Emerson Pires and Flavio Goncalves, who are still at large, also played a role in the scam, which ran from 2020-2022.

Bankman-Fried on the hook in Texas, called to appear at the February hearing

An investigation by the Texas Securities Commission is investigating whether Sam Bankman-Fried and FTX US violated Texas securities laws. Bankman-Fried is due to appear in court on February 2 as part of the investigation. According to a hearing notice filed by Texas State Securities Board Director Joseph Rotunda and served on Bankman-Fried on November 29, FTX offered US Texans unregistered securities through its "EARN" accounts.

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