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Saturday, 26 November 2022
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Following the collapse of FTX which was headquartered in the island country of Bahamas, reports say Bahamians are now struggling to find a way to make sense of the turn of tides.
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According to a Wall Street Journal report, the country which had encouraged crypto companies to feel at home is now being rocked by unpleasant aftermath of the implosion of FTX. This shows that the impact of the FTX is not being felt by crypto investors only, the consequences are spread across other strata.
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Here is our weekly newsletter roundup. Now get a bucket of popcorn and follow through. First, a brief summary….
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Summary of the news
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- El Salvador launches bitcoin office
- Crypto Founders arrested for fraud
- Trouble in Bahamas
- Binance shows proof of reserve
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El Salvador launches bitcoin office
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El Salvador on Friday announced the creation of its National Bitcoin Office (ONBTC) which will oversee all initiatives involving bitcoin which it adopted as a legal tender last year. The new agency will serve as a specialised administrative division with functional and technical autonomy within the office of the president.
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The entity was established by Decree No. 49, signed by El Salvadoran President Nayib Bukele and the Minister of Tourism. Among the duties of the entity is to conceptualise and provide information about Bitcoin, blockchain and cryptocurrencies in El Salvador "to the media and any interested person."
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Furthermore, the National Bitcoin Office will assist foreign Bitcoin, blockchain and cryptocurrency businesses and investors who sought to do business in El Salvador and visit the nation, as well as actively promote El Salvadoran involvement in various international forums.
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Crypto founders arrested for fraud
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The two founders of the now-defunct Bitcoin cloud miner HashFlare have been arrested in Estonia over their alleged involvement in a $575 million crypto fraud conspiracy. HashFlare was a cloud mining company created in 2015, which purported to allow customers to lease the company’s hashing power in order to mine cryptocurrencies and gain an equivalent share of its profits.
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According to a statement from the United States Department of Justice citing court documents on Monday, the entire mining operation, run by founders Sergei Potapenko and Ivan Turõgin, was part of a “multi-faceted scheme” that “defrauded hundreds of thousands of victims.”
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The pair is also accused of conspiring to launder their “criminal proceeds” through 75 properties, six luxury vehicles, cryptocurrency wallets and thousands of cryptocurrency mining machines. The HashFlare founders have been charged with conspiracy to commit wire fraud, 16 counts of wire fraud and one count of conspiracy to commit money laundering using shell companies and fraudulent invoices and contracts, and could face up to 20 years in prison if convicted.
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Trouble in Bahamas
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Suffering from the aftermath of the Bahamas-headquartered FTX crash, locals remark that they are having to contend with vacant apartments and the loss of job opportunities once provided by the collapsed exchange.
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The community suggests that FTX’s sudden implosion has left a trail of unemployment on the tiny 80-square-mile island. When functioning at full capacity, FTX provided employment for locals, reportedly spending over “$100,000 a week on catering,” and also set up a private shuttle service to transport workers around the island. FTX also hired a number of local Bahamians in areas such as logistics, events planning and regulatory compliance, according to the WSJ.
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With the collapse of FTX, many high-spending foreigners who worked for the company and once boosted the local economy have reportedly fled the island, leaving Bahamian security guards to now guard “nearly vacant buildings."
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According to a statement from the Royal Bahamas Police Force sent to Reuters on Nov 13, an investigation into possible criminal misconduct over the insolvency of FTX is underway by financial investigators and Bahamian securities regulators.
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Binance shows proof of reserve
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Yesterday, Binance released its first Merkel Tree Proof of Reserves (PoR) system as a show of its commitment towards transparency following the collapse of FTX.
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“As part of our ongoing commitment to transparency, we have provided new updates on Binance’s Proof of Reserves. Further updates for $ETH, $USDT, $USDC, BUSD & BNB will be coming in the near future. Stay tuned.”
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Per the statement, Binance currently holds 582,485.9302 BTC in its onchain reserve and 575,742.4228 BTC in the customer net balance. To assure customers of their funds’ safety, the exchange further noted that it covers their deposits on a 1:1 ratio with its reserve.
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Accordingly, the exchange noted that it had zero debt in its capital structure, adding that it had made sure that it had an emergency fund (SAFU fund) for extreme cases. The move comes after the exchange disclosed its hot and cold wallet balances in a November 10 report promising to follow up with a Merkel tree PoR system to allow third-party auditors to verify the holdings.
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Other stories we are following
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