TLDR Crypto 2022-11-21

The party behind the $600 million FTX exploit has started exchanging millions of dollars worth of ether for Ren Bitcoin, a token that represents bitcoin on other blockchains. They are converting the tokens using decentralized exchange 1inch. The tokens were then transferred using the Ren bridge. The Ren bridge has previously been used to launder at least $540 million.

Grayscale Bitcoin Trust shares are trading at 43% relative to the price of the underlying bitcoin. The price drop may be due to Genesis Global Capital, a company owned by the owner of Grayscale Investments, halting customer withdrawals from its lending unit. Grayscale has reassured investors that Genesis was not a counterparty or service provider for any Grayscale products and that the business will continue to operate as usual. The last time GBTC shares traded at a premium was in March 2021.

Cardano is releasing a new privacy-focused blockchain called Midnight. Midnight uses zero-knowledge-proof technology and it will deliver zero-knowledge-proof smart contracts. It will be accompanied by a token called dust. The system will balance the need to preserve privacy while allowing regulators and auditors a backdoor into the system when permission is granted.

In this article, Vitalik Buterin discusses the history of attempts to move exchanges closer to trustlessness, the limitations of these techniques, and newer ideas that rely on advanced technologies. It is possible to create cryptographic proofs that show that centralized exchanges hold the funds they can claim they have. Exchanges could also build systems where they can't withdraw depositors' funds without users' consent.

Genesis, the only full-service prime broker in crypto, has halted withdrawals from its lending unit. A prime broker is similar to a brokerage firm, except that it works with large, sophisticated institutions. Prime brokerage businesses are attractive fee machines, as long as certain conditions are met. Otherwise, they become fragile businesses prone to counterparty risk, bank runs, and asset-liability mismatch. Genesis has likely lost unless it can raise equity or get acquired.

This Twitter thread presents some of the worst examples of FTX's internal controls from the company's bankruptcy court filing. Examples include employees submitting expense reimbursements over chat, related party loans, a non-existent cash management system, and insufficient documentation of employee records. Customer funds were not recorded on the balance sheet and were likely all put into a general central slush fund.

Alameda Research allegedly made speculative investments using FTX customer deposits without users' knowledge. FTX's bankruptcy filing estimates that there are more than one million creditors seeking damages. Alameda's CEO, Caroline Ellison, was one of the architects behind the collapse, which wiped out many people's life savings. This article focuses on Ellison, her past, her role at Alameda, and her part behind FTX's and Alameda's downfall.

Solana has been hit hard by the FTX disaster. Its total value locked has plunged by almost 70% since November 7. Solana Labs' CEO says that the company maintains enough reserves to contain its current burn rate for approximately 30 months. The Solana Foundation and Solana Labs sold 58.08 million SOL tokens to Alameda and FTX since 2020, approximately 11% of SOL's total supply. The Solana Foundation held cash, FTX stock, FTT tokens, and Serum's SRM tokens on FTX.

The swap will be carried out with the assistance of a third party.

Vitalik Buterin, in a statement related to FTX's recent collapse, emphasized the stability of crypto's underlying technology while acknowledging the impact of FTX's meltdown.

Anyone can fork a web3 project, but tokens allow users to become investors and therefore incentivized to see platforms collect fees from future users.

FTX users may be able to get their money back if they file a Schedule E tax form with their banks, but only if their accounts were funded by an ACH direct deposit or credit card in the past 60 days.