Crypto exchange Bittrex received bankruptcy court approval on Monday to shut down its U.S. operations after a months-long effort to return crypto deposits to customers, Reuters reported. U.S. Bankruptcy Judge Brendan Shannon approved Bittrex's bankruptcy plan at a court hearing in Wilmington, Del., clearing the company to emerge from bankruptcy with a wind-down plan that would pay remaining creditors in full. Bittrex filed for bankruptcy protection in May, shortly after the U.S. Securities and Exchange Commission charged it with operating an unregistered securities exchange. Bittrex chose to shut down its U.S. operations and return assets to customers in the wake of the SEC complaint. It reached a $24 million settlement with the SEC in August. Seattle-based Bittrex said the bankruptcy filing would not impact Bittrex Global, which serves customers outside the United States. The company's non-U.S. operations are based in Liechtenstein.
Over and over on Tuesday, Sam Bankman-Fried, the founder of the failed FTX cryptocurrency exchange, denied knowing that billions of dollars in customer money had been misappropriated until shortly before his company collapsed last year, as a federal prosecutor grilled him for a second day in his criminal fraud trial, the New York Times reported. The 31-year-old onetime crypto mogul fumbled for an answer when the prosecutor, Danielle Sassoon, repeatedly asked whether he had told his employees not to spend FTX customer money on investments, pricey real estate and other expenditures. Mr. Bankman-Fried also couldn’t name any employees who might have authorized the use of FTX customer money for that spending. “I don’t recall giving any direction,” Mr. Bankman-Fried said three times about the spending of FTX customer money before he concluded his testimony. Both sides rested their case before lunchtime on Tuesday, with closing statements set to unfold on Wednesday. Mr. Bankman-Fried was on the stand for a third day testifying before a jury in his own defense for a trial that has come to symbolize the highs and lows of the volatile crypto industry. The entrepreneur has been accused of masterminding a yearslong fraud to steal as much as $10 billion from FTX’s customers and then funneling the money to extravagant real estate purchases and other spending, as well as using the funds to prop up a crypto trading firm he also founded, Alameda Research. FTX, which was valued at $32 billion at its peak, imploded spectacularly last year, leaving many customers unable to recover their deposits. Mr. Bankman-Fried has pleaded not guilty to seven counts of fraud, conspiracy and money laundering. If convicted, he could face what amounts to a life sentence.
The New York judge overseeing Celsius Network LLC’s bankruptcy urged the U.S. Securities and Exchange Commission to move quickly in deciding if it will authorize the failed crypto lender’s plan to transform itself through chapter 11 into a publicly-traded Bitcoin mining firm, Bloomberg News reported. Judge Martin Glenn told an SEC lawyer during a Monday court hearing he hopes the regulator will go through its own decision-making process expeditiously because Celsius and its creditors have moved through chapter 11 relatively quickly. “The SEC will make whatever decision it believes is the correct one,” Judge Glenn said. “I just hope the process will move forward, so if there are any bumps in the road we can try and work those out along the way.” Judge Glenn is considering whether to approve Celsius’s plan to partially repay customers whose accounts have been frozen since June 2022, weeks before the company filed bankruptcy. Celsius’s bankruptcy plan proposes repaying customers through a combination of crypto currency and stock in a new publicly traded Bitcoin mining company guided by a new management team led by Arrington Capital. Celsius and creditors would still need clearance from the SEC if its proposal to transform the company into a new business is approved by Judge Glenn, according to court documents. The crypto firm could liquidate if its plan to exit chapter 11 as a crypto miner fails. Celsius’s repayment proposal, though widely supported by creditors, is being challenged by some of its customers. Customers who spoke Monday against the restructuring plan said they’d prefer liquidation because they’d receive more Bitcoin and Ethereum as opposed to stock in a new, unproven venture.
FTX founder Sam Bankman-Fried testified on Monday that the collapse of the cryptocurrency exchange was precipitated by the head of his Alameda Research trading firm failing to adequately hedge against a downturn in the market, Reuters reported. Testifying in his defense for a second day, the 31-year-old former billionaire said that he asked Caroline Ellison — chief executive of Alameda Research and his former romantic partner — to make trades that would offset the risk of falling cryptocurrency prices starting in mid-2022. Answering questions from his defense lawyer, Mark Cohen, Bankman-Fried said Ellison became emotional when he discussed the risk of Alameda — which had lent funds to FTX executives and invested in startup companies — going bankrupt. "She started crying," he said. "She agreed that Alameda should have hedged, she also said that maybe it shouldn't have made some of the venture investments." Ellison is one of three of Bankman-Fried's former close confidantes who pleaded guilty and testified for the prosecution. Bankman-Fried has pleaded not guilty to two counts of fraud and five counts of conspiracy. Prosecutors have said he looted billions of dollars in FTX customer funds to prop up Alameda, make speculative venture investments, and contribute to U.S. political campaigns. If convicted, he could face decades in prison.
FTX founder Sam Bankman-Fried told a jury Friday that he didn’t commit fraud and didn’t take customer funds, beginning his defense against criminal charges that he stole billions from his cryptocurrency exchange and spent the money on investments, political donations, and real estate, YahooFinance.com reported. He did, however, say that he "made a number of small mistakes and a number of big mistakes." His biggest mistake, he said, was not having a chief risk officer. "A lot of people got hurt," he said. His highly anticipated testimony began Friday morning with questions from his attorney Mark Cohen that attempted to address the heart of the government’s case against his client. Prosecutors have alleged that Bankman-Fried deliberately stole funds that belonged to FTX customers and secretly lent the assets to his crypto trading firm Alameda Research. They produced several key witnesses over the last month who corroborated those claims.
Crypto platform Gemini Trust Co. is suing bankrupt crypto lender Genesis Global Holdco LLC in an attempt to determine who rightfully owns a slug of shares in the Grayscale Bitcoin Trust now worth nearly $1.6 billion, Bloomberg News reported. In a bankruptcy-court lawsuit filed Friday, Gemini asked a federal judge to find that Genesis has no right to more than 60 million GBTC shares promised as collateral to users of Gemini’s Earn product. The shares at issue — most of which are still held by Genesis or its affiliates — should not be used to repay other Genesis creditors, the company argues. The lawsuit comes just days after Genesis said it was dropping a proposed settlement with its parent company, Digital Currency Group, in favor of suing the firm. The settlement was a cornerstone of a debt-repayment plan that could have allowed Genesis creditors to recover between 70 and 90 cents on the dollar, according to Genesis. Gemini disputed those estimates. Through its new lawsuit, Gemini says it intends to clarify the value of its claims against Genesis and eventually tap the GBTC shares to repay its users.
The National Hockey League’s Arizona Coyotes said that bankrupt sports broadcaster Diamond Sports Group owes the team nearly $18 million following the termination of its telecast deal, Bloomberg News reported. Diamond has said that it needed to end the deal because its regional sports channel, Bally Sports Arizona, was losing money and telecast agreements with the state’s major professional teams were only getting more expensive. The team said in a bankruptcy court filing on Thursday that it was owed money. Terminating the Coyotes deal effectively ended Diamond’s broadcasting of Arizona’s major professional sports teams. Diamond ended its broadcast deal with Major League Baseball’s Arizona Diamondbacks earlier this year and stopped broadcasting the National Basketball Association’s Phoenix Suns after declining to match a competing offer. Earlier this month, the Coyotes announced a multi year agreement with Scripps Sports to broadcast its games locally on free TV channels. Diamond has said that rights fees it owed to the Coyotes “total tens of millions of dollars annually and increase yearly.” The hockey team’s claim for repayment is an unsecured debt which, in general, is repaid in chapter 11 for pennies on the dollar. Diamond filed chapter 11 in March and has been attempting to formulate a plan to get out of bankruptcy as the NBA and NHL regular seasons get underway.
FTX founder Sam Bankman-Fried previewed a potential defense Thursday when he told a federal judge that he relied on the blessing of lawyers to make business decisions such as deleting communications and making loans to himself, actions that prosecutors said allowed him to commit the crimes that led to the implosion of his crypto exchange, the Wall Street Journal reported. Bankman-Fried, on trial for fraud, money laundering and other offenses, had been expected to testify in front of a Manhattan federal jury on Thursday afternoon. Instead, in what amounted to an unusual practice session after the jury was dismissed for the day, U.S. District Judge Lewis Kaplan required the FTX founder to walk through several subjects that were in dispute so the judge could rule on what Bankman-Fried could say to jurors. Wearing an oversize gray suit and purple tie, Bankman-Fried began steadily and confidently, walking through business decisions that he said were guided by legal advice. But the rehearsal quickly turned when the prosecution came out swinging. Under cross examination, Bankman-Fried testified that he couldn’t recall specific conversations with the lawyers who he earlier said had overseen bank accounts, loans and communication policies. He at times was evasive and stumbled while saying he didn’t remember key details of the alleged conduct in question. Assistant U.S. Attorney Danielle Sassoon pressed Bankman-Fried on whether he had proof of the involvement of certain lawyers. “Do you have any paper records of these consultations?” she asked. Bankman-Fried said he had requested such records but didn’t have them. Under other questioning, he said he had little knowledge of some inner workings of the company he created.
FTX founder Sam Bankman-Fried has decided to testify in his own defense, a legal gamble that sets up a dramatic conclusion to his criminal trial in New York City, YahooFinance.com reported. The 31-year-old, who pleaded not guilty to seven counts of fraud and money laundering, has sat silently at his Manhattan trial for the last three weeks while prosecutors outlined their version of what happened to $8 billion in missing FTX customer deposits. He could take the stand as early as today, when the trial is scheduled to resume. His attorneys reportedly told U.S. District Judge Lewis Kaplan on Wednesday that Bankman-Fried would testify. Once Bankman-Fried takes the witness stand he opens himself up to significant risk because he can be cross-examined "extensively," said Northwestern University criminal law professor Juliet Sorensen. The government, which is expected to rest its case as soon as Thursday, alleges that FTX customers couldn't withdraw their money during the exchange's final days in November 2022 because Bankman-Fried had allowed his crypto trading fund, Alameda Research, to spend it. That claim was backed up by testimony from friends and former classmates Bankman-Fried hired for top jobs at FTX and Alameda. Some of those executives pleaded guilty to multiple felonies and agreed to testify against him. Read more.
In related news, Prices for FTX Group claims shot higher after an adviser to the failed crypto conglomerate said it is considering proposals from three bidders for its currently shuttered exchange, Bloomberg News reported. Cherokee Acquisition, which brokers bankruptcy claims, is now quoting larger FTX claims between 50 and 53 cents on the dollar, according to founder Vladimir Jelisavcic. Prices were in the low-to-mid 40 cents range last week. FTX claim prices have been rising relatively steadily in the year since the crypto empire collapsed into bankruptcy and advisers began recovering billions of dollars in assets. Major hedge funds have also been buying and selling the claims, which range from the rights to FTX accounts to the damages owed as a result of an abandoned contract. On Tuesday, FTX investment banker Kevin M. Cofsky said in court that the company is engaging with “multiple parties every day.” Options under consideration include selling the entire exchange, bringing in a partner to help restart the exchange or rebooting it by itself. Read more.
