Daily Digest - 18 November 2022

Headlines

▌CZ: Industry Recovery Fund or as Much as 2 Billion US Dollars

TechCrunch reporter Jacquelyn Melinek said on personal social media that Binance founder CZ said that he has been discussing the industry recovery fund, which may amount to as much as 2 billion US dollars. According to previous news, Binance will set up an industry recovery fund to help high-quality projects survive the liquidity crisis.

Policy

▌CFTC commissioner: LedgerX Is Being Monitored and Supervised "On a Daily Basis"

US Commodity Futures Trading Commission (CFTC) Commissioner Kristin N. Johnson said at a cryptocurrency regulatory conference in London on Thursday that the regulator has taken "concrete measures" against FTX's US subsidiary LedgerX and is "every day" conducting monitoring and oversight to “supervise that every dollar of customer assets held by LedgerX continues to be available.” LedgerX is the “point of interaction” between the CFTC and FTXUS, which filed to register with the CFTC in 2017 before being acquired by FTX last year. Johnson said the CFTC has asked LedgerX to maintain funds independently, submit monthly, quarterly, and annual inspections, and certify the authenticity of assets held on behalf of clients through balance sheets and verified bank statements. It also requires FTX to hold reserves, including a one-year liquidity reserve, and not to draw, pledge, or reinvest working capital.

▌FSB official: Cryptocurrency Will Soon Threaten Global Financial Stability

Steven Maijoor, chairman of the Financial Stability Board (FSB) Encrypted Assets Working Group, said on Thursday that the recent market turmoil has given the FSB more reason to develop a globally consistent regulatory framework. The rapid growth of crypto markets, amidst structural loopholes and inadequate regulation, means that they will “soon reach a point where they pose a threat to the stability of the global financial system. Many crypto markets are characterized by high levels of information asymmetry, so often there is no way of knowing which actors have bad intentions and which platforms are at risk of overextending. Cryptocurrencies cannot simply be dismissed as a fad and much crypto activity does not comply with existing regulations or occurs outside regulatory boundaries.

Cryptocurrency

▌FTX U.S. Lawyer Accuses SBF Tweet of Allegedly Avoiding U.S. Courts

FTX’s U.S. lawyer accused SBF in a court document of continuously making destructive remarks on Twitter, seemingly avoiding the U.S. court and choosing the Bahamas, expanding the scope of FTX’s lawsuit in the Bahamas, and transferring assets from the U.S. court. Control was transferred to accounts controlled by the Bahamian government. FTX is currently controlled by restructuring lawyer John J.Ray III, who once took over the liquidation of Enron. He asked a federal judge in Wilmington, Delaware, to transfer to Delaware a competing bankruptcy case brought by Bahamas liquidators in New York that would consolidate all of FTX’s U.S.-based bankruptcy proceedings into one court. Delaware judges are also asked to prevent all government entities from taking action in any court around the world to seize assets or collect money from this FTX.

▌Wall Street Journal: Genesis Seeks $1 Billion Emergency Loan

Genesis sought to obtain US$1 billion in emergency credit funds before 10:00 a.m. on Monday, citing tight liquidity. The company failed to secure the funding, according to a confidential fundraising document reviewed by The Wall Street Journal.

▌Coinbase CFO: FTX Bankruptcy Is More and More Like the 2008 Financial Crisis

Coinbase Chief Financial Officer Alesia Haas (Alesia Haas) said that the bankruptcy of FTX is not the end of the event, and it will have a comprehensive impact on the cryptocurrency industry, but the impact has not yet appeared. FTX's bankruptcy looks more and more like the 2008 financial crisis.

▌Public Chain SuiNetwork Launched Its Testnet

LayerOne blockchain created by former Meta (formerly Facebook) engineers announced the opening of the testnet. The team stated that the testnet Wave1 focuses on operators, especially validators and participants who operate full nodes. Sui aims to improve decentralized coordination and incident response, and identify a core set of operators with experience in deployment, monitoring, and debugging. Additionally, unlike Devnet, on Testnet, event management will be driven by the community, not MystenLabs, which will allow community members to provide more input and take greater responsibility for maintaining Sui’s health. As previously reported, in September, MystenLabs, the company behind SuiBlockchain, raised $300 million in a round of financing led by FTXVentures, which valued MystenLabs at $2 billion.