Daily Digest - 14 November 2022

Headlines

▌Two Audit Companies Related to FTX May Face Scrutiny

According to the British Financial Times, two FTX-related audit firms, Armanino and Prager Metis, may face scrutiny. Both audit firms have audited FTX’s books. SBF announced on social media last year that its financial statements had been audited, but the relevant accounts were not made public, and the name of the auditing company was only made public before it went bankrupt. At present, neither of the two accounting firms has commented on the scope of their work in FTX or the last publication Time for audit opinion comments. The British Financial Times disclosed that the Public Company Accounting Oversight Board (PCAOB), the U.S. auditing industry regulator, issued a report in August this year saying that it found flaws in its audits of four listed companies by examining Prager Metis’ audit reports.

Policy

▌St Kitts and Nevis to Adopt Bitcoin Cash as Legal Tender in 2023

St. Kitts and Nevis Prime Minister Terrance Drew announced at the BCH conference in St. Kitts and Nevis that BCH will become the country’s legal tender in March 2023. He added that the country will also look into mining BCH and welcomes dialogue and exploration of “future opportunities” with the cryptocurrency. The announcement sparked a debate over the country’s choice to adopt Bitcoin Cash over Bitcoin, with proponents of the decision pointing opponents to the WhyBitcoinCash website for information.

▌Bahamas Financial Crimes Investigation Bureau: Has Formally Intervened to Investigate the FTX Incident

The local Bahamas police have formally intervened to investigate FTX. The Royal Bahamas Police Force (RBPF) issued a statement on Sunday morning, saying: "In light of the global collapse of FTX and the interim liquidation of FTX Digital Markets Ltd., a team of financial investigators from the Financial Crimes Investigation Service of the Royal Bahamas Police Force is working closely with the Bahamas Securities Commission to investigate whether any criminal misconduct has occurred.” Former FTX CEO Sam Bankman-Fried was interviewed by local police on Saturday night, it was previously reported.

Cryptocurrency

▌Crypto Markets Experience Biggest Miner Selling Pressure Since January 2021

The bankruptcy of FTX triggered a continued downturn in the market, and the market suffered the largest single-day selling pressure from miners since January 2021. Data analyzed by CryptoSlate showed that in November 2022, the average hash price reached $0.05. Bitcoin’s current price of $17,500 makes mining unprofitable not only for small miners, but also for larger ones. Around $9,000 per bitcoin miner, the latest Bitmain S19 ProASIC miner has a 1,500-day payback period and an average hash price of $0.06.

▌The Trading Platform AAX Suspends All Business and Says That "It Takes 7-10 Days to Proofread and Restore User Assets"

The trading platform AAX suddenly announced that it would stop all business, including trading, currency withdrawal, etc., saying that "the current system upgrade requires our third-party partners to proofread and restore all users' asset data. Due to the current market situation, the integration is taking longer than usual and is currently queuing for 7-10 days to complete.” In this regard, Ben Caselin, director of research and strategy at AAX, said in the community that the maintenance will take longer, and AAX is discussing enabling withdrawals during the continuous maintenance. According to Coingecko data, AAX is the top 20 derivatives exchange. AAX is a cryptocurrency exchange established in Hong Kong in 2019.

▌FIFA Announces Authorization to Launch Four World Cup Themed Web3 Games

According to the official website of FIFA (FIFA), FIFA has authorized the launch of a series of new Web 3.0 games to entertain and attract a wider range of fans ahead of the 2022 World Cup in Qatar. It is reported that there are a total of four Web3 games launched this time, namely: metaverse game Uplandme, match prediction game Matchday, fan center Phygtl and 4v4 casual football game AlteredStateMachine. FIFA says all of these games are designed for the future of Web 3.0 and digital engagement, with gaming and esports being one of the fastest growing opportunities for FIFA, which is expanding into new digital spaces, platforms and games.

▌The FTX Mine Explosion Incident Affected South Korean Users the Most, Followed by Singapore

According to the news on November 13, many retail investors in Singapore were affected by the FTX incident. According to data from earthweb.com, Singapore users accounted for more than 5% of the total number of FTX users, becoming the second most affected country by FTX, second only to the ranking South Korea ranked first, and Germany ranked third. It is reported that many retail investors in Singapore did not deposit assets into FTX’s Singapore entity Quoine Pte Ltd, although the entity has been exempted by the Monetary Authority of Singapore (MAS). Quoine has obtained a six-month exemption from July 28, which means that the entity can already provide digital payment token services to retail investors in Singapore. Once the license is obtained, the company will change its name to FTXSingapore, but the inspection found that, a large number of Singaporean users did not migrate from FTX.com to Quoine in time. In contrast, U.S users must open an account with FTXUS and cannot open an account with FTX.com.

▌Research: FTX May Have Minted 100 Million SRM out of Thin Air to Support Its Assets and Liabilities

Lucas Nuzzi, head of research at CoinMetrics, tweeted that FTX may have minted Serum (SRM) out of thin air to shore up its balance sheet, and the total supply of SRM has increased by 60% this year through two large-scale minting. None of this has been disclosed before, based on currently available information. The first mint is 50 million SRM on February 19, and the second mint is 50 million SRM on May 25. It was previously reported that FTX valued its SRM position at $2.2 billion, the largest position on its balance sheet. Serum has a market cap of less than $88 million, so they are likely to use a higher SRM price for valuation, which may be illegal.