Welcome to Barmy’s Daily Crypto News – November 11th, 2022
1. Ark Investments topped up its Coinbase stock
Following the disclosure of FTX’s liquidity problems and Coinbase’s claim that it had “little exposure” to the unstable trading platform, Ark Investments increased its holdings of Coinbase stock.
The Cathie Wood-led Ark Investments has expanded its Coinbase (COIN) holdings by purchasing 237,675 COIN shares on November 9 for around $12.1 million amid the turmoil on the FTX and cryptocurrency markets.
Ark Investment Management increased the number of shares in its ARK Innovation ETF (ARKK), ARK Next Generation Internet ETF (ARKW), and ARK Fintech Innovation ETF from 237,675 COIN to 207,527, 22,416 and 7,732 respectively (ARKF).
The tech-focused investment company made the purchase after Coinbase said it had “limited exposure” to the currently cash-strapped cryptocurrency trading platform with only $15 million on deposit to “enable business operations and customer trades” in response to FTX’s liquidity problem.
2. BlockFi has halted client withdrawals on its platform
BlockFi restricts platform activity, stopping customer withdrawals among other things. As part of a larger restriction on activity following the collapse of FTX, BlockFi has stopped client withdrawals on its platform.
The business said in the tweet from November 11 that it has been unable to conduct business as usual due to “a lack of clarification on the status of FTX.com, FTX US, and Alameda.” As a result, it has curbed platform activity until further information about the evolving situation is available.
Additionally, the company has asked that customers refrain from making deposits to Interest Accounts or BlockFi wallets at this time.
3. Genesis Trading shares $175M of funds are locked in FTX
Genesis Trading, the market maker and lending arm of Digital Currency Group, disclosed that its derivatives division had over $175 million in money stashed away in an FTX trading account.
The information was released by Genesis in a string of tweets on November 10; the company made it clear that the locked funds “would not impair our market-making activity.”
Additionally, Genesis declared that they were in no way connected to FTX or its sister business Alameda Research, which FTX CEO Sam Bankman-Fried has said is “also shutting down trade.”
To be clear, Genesis does not currently have any loan arrangements with FTX or Alameda.
Their commercial operations—which include financing and trading in both spot and derivatives—remain unhindered, and their balance sheet is nevertheless robust. In order to minimize their risk under erratic market conditions, our clients turn to us, and yesterday was one of their top 5 volume days for their derivatives business.
4. For embattled exchanges, Chainlink Labs provides Proof of Reserve service.
On Nov. 10, Chainlink Labs presented its Proof of Reserve product as a response to potential trust difficulties in the cryptocurrency exchange business. Will cryptocurrency continue to make the same mistakes as the traditional black-box financial business, Chainlink Labs posed in a tweet thread. Or will a more effective system develop?
It provided its Proof of Reserve (PoR) product in response to this query, claiming that it can be used “for verifying centralized exchange asset reserves, off-chain bank account balances, cross-chain collateral, real-world asset reserves, and much more.”
Due to a liquidity problem at FTX, the second-largest cryptocurrency exchange in the world, the cryptocurrency market has been in freefall during the last few days. The exchange’s inability to handle withdrawals promptly has caused panic to spread throughout the cryptocurrency market.
Due to these persistent challenges, the crypto community has begun to consider potential solutions. One suggestion made is for users to demand that every exchange they use provide a Proof of Reserve.
Using the Proof of Reserve technology, consumers may instantly check the reserves of crypto exchanges. Proof of Reserve has already been implemented by some exchanges, and according to CZ of Binance, all exchanges ought to now provide this option.
5. FTX US has left its position at Crypto Council for Innovation
On Nov. 10, CCI CEO Sheila Warren informed Cointelegraph that the council has accepted FTX US’ departure as an associate member of the organization. The company left as cryptocurrency exchange FTX reported liquidity problems, causing market volatility and raising worries among international regulators and lawmakers.
Sam Bankman-Fried, the CEO of FTX, claimed that FTX US had not been “financially harmed” by the liquidity problems the international exchange was experiencing. The U.S. exchange, however, also made a notice on its website that trading might stop “in a few days” and advised users to close any open holdings if they so desired.
The CCI is an alliance made up of Andreessen Horowitz, Block, Coinbase, Electric Capital, Gemini, Fidelity Digital Assets, Paradigm, and Ribbit Capital that was established in April 2021. The advocacy group has engaged U.S. government officials to assist lawmakers on matters relating to blockchain and cryptocurrency.
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