TLDR Crypto 2022-11-11

The latest report from the Bureau of Labor Statistics found that the consumer price index rose by 7.7%, indicating that US inflation may be starting to cool off. While the inflation rate is still well above the Federal Reserve's inflation target of 2%, it is an improvement from September's 8.2% inflation rate. Cryptocurrency markets rose following the report's release. The Federal Reserve intends to continue raising rates until US inflation is reigned in.

FTX lent billions of dollars worth of customer assets to fund risky bets by Alameda Research. Alameda owes FTX about $10 billion. FTX had a total of $16 billion in customer assets, so the company had lent more than half of its customer funds to Alameda. Sam Bankman-Fried tweeted on Monday that FTX had enough to cover all client holdings and that the company didn't invest client assets. The tweet has since been deleted.

Dark Forest is a game that shows how blockchains can be used for more than just moving money around. Partly inspired by the science fiction novel The Dark Forest, the massively multiplayer strategy game takes place in an infinite, procedurally generated universe. Every player move is validated with zero-knowledge proofs that don't reveal the player's coordinates in the universe. The game demonstrates how advanced cryptography can be used to create rich digital realities.

MetaMask has released MetaMask Bridges, a bridge aggregation service. It allows users to transfer assets across multiple blockchains within the wallet. Users can bridge assets worth up to $10,000. The service supports ETH, WETH, stablecoins, and native gas tokens. It currently works with Ethereum, Avalanche, Binance Smart Chain, and Polygon.

Losses first have to be realized before they can be used to lower potential taxable gains. Assets with pending losses need to be disposed of by selling them into fiat or swapping them into another asset. If there is still a legal claim to recover the funds then those losses are not yet realized. There were some cases in the Mt. Gox fiasco where clear documentation of completely lost access to the platform was accepted as proof of lost funds.

This Twitter thread contains Sam Bankman-Fried's apology for recent events and his plans for the immediate future. Poor internal labeling of bank-related accounts resulted in Bankman-Fried being substantially off on his estimates. Bankman-Fried is currently trying to raise liquidity. The money will first go to users and then to investors and employees. FTX.US is still 100% liquid and its users are fine.

Sam Bankman-Fried lives in a luxury penthouse in the Bahamas with nine other people who are closely involved with FTX and Alameda. They were all at some point in a relationship with someone else in the house. FTX and Alameda have been described by employees as full of conflicts of interest and nepotism. Employees have been kept in the dark about the events of the past week.

FTX employees are in talks to sell parts of its business, in some cases without Sam Bankman-Fried's participation. The exchange faced a liquidity crunch this week and will require a bailout to remain solvent. Bankman-Fried says that FTX.US, which is a separate company from FTX, was not financially impacted by the events of the past few days and that the platform is 100% liquid. FTX.US has told customers to close out their positions and that trading may be halted in a few days.

FTX has reached an agreement with Tron to establish a special facility to allow holders of TRX, BTT, JST, SUN, and HT to swap assets from FTX 1:1 to external wallets.

Binance has released a list of its cold wallets and reserves and it will share its Merkle tree proof-of-funds in the coming weeks.

Tether has no credit towards FTX or Alameda Research.

28.5 million tokens were restaked due to a policy change of cloud service provider Hetzner.

Sam Bankman-Fried is shutting down Alameda Research as confidence in the firm has been irreparably harmed.

Tether has started to receive requests from law enforcement to temporarily freeze FTX's assets while an investigation occurs.