Three biggest crypto stories from the past week

Quick Take

  • Sam Bankman-Fried said he is willing to testify in front of the House Committee on Financial Services on Dec. 13.
  • Amber Group continued to cut jobs, put its expansion plans on hold and owes about $130 million to troubled crypto lender Vauld’s CEO, Darshan Bathija.
  • Genesis, a crypto lender that halted client withdrawals last month, said it will take weeks rather than days to complete its action plan.

FTX dominated the crypto news cycle for the sixth week in a row, with two key developments. First, U.S. prosecutors are reportedly probing Sam Bankman-Fried, the disgraced founder of now-bankrupt crypto group FTX, for a potential fraud case against him, and second, Bankman-Fried has confirmed his willingness to testify in front of the House Committee on Financial Services in Washington, D.C., on Dec. 13. News related to the domino effects of the FTX fallout also continued to emerge from key players such as Genesis and Amber.

FTX and SBF unfoldings

After first ghosting the Senate Banking Committee's demand that he testify or otherwise cooperate with an investigation into his failed corporate empire, Bankman-Fried said he's willing to testify before Congress next week on FTX's collapse.

Bankman-Fried said he still does not have access to much data, so there is a limit to what he will be able to say, but as the committee still thinks it would be useful, he is willing to testify on Dec. 13. It remains to be seen whether he actually shows up.

Meanwhile, U.S. prosecutors are reportedly probing Bankman-Fried for a potential fraud case against him. Prosecutors are said to be examining whether hundreds of millions of dollars were improperly transferred to the Bahamas around the time of FTX's bankruptcy protection filing on Nov. 11 in the U.S. They are reportedly also studying whether FTX broke the law by transferring funds to Alameda Research, FTX's sister trading and investment firm that also filed for bankruptcy protection with FTX last month.

Amber's growing troubles

Crypto firm Amber Group, which has exposure to FTX, saw its troubles increasing amid the ongoing crypto winter.

The Singapore-based crypto trading and lending firm, which started to cut staff in September, conducted more layoffs. Amber's headcount once peaked at about 1,100, and now that figure is reportedly expected to fall to around 400 amid more job cuts. Amber's U.S. and European offices now have headcounts in the single digits.

The firm has also put its expansion plans on hold and has been shifting priorities regarding global marketing and sponsorships. Amber had agreed to sponsorship deals with soccer teams Atletico Madrid and Chelsea, estimated to be worth, respectively, about $44 million and $25 million annually. The firm is trying to renegotiate both commitments, according to The Block's sources. Bloomberg reported that Amber is seeking to exit its deal with Chelsea.

Earlier this week, Amber said it was "business as usual" following reports of potential insolvency. As the FTX news hit, Amber had been in the process of fundraising, seeking to raise $100 million at a flat valuation of $3 billion. The Financial Times reported on Friday that Amber had managed to secure $50 million of the $100 million, with the deal to be announced in January.

To add to its problems, Amber also owes about $130 million to troubled crypto lender Vauld's CEO, Darshan Bathija, who parked Vauld's funds in his name with Amber.

Genesis issues

Crypto lender Genesis, which had to halt withdrawals and new loan originations last month amid the FTX fallout, said it will take weeks rather than days to complete its action plan.

The firm said it was working "in consultation with highly experienced advisors and in close collaboration with our owner, DCG," as well as holding discussions with client representation groups.

Genesis reportedly owes its creditors at least $1.8 billion. The firm had to halt client withdrawals last month after taking large hits from FTX and earlier from Three Arrows Capital. Genesis has been trying to raise funds and has hired investment bank Moelis & Company to explore its options.

The company earlier warned about a potential bankruptcy in the event it is unable to secure funding.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from former FTX and Alameda founder Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.
 

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