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A new report by the examiner of bankrupt crypto lender Celsius Network details shortfalls in controls and operations at two of the company’s product offerings related to digital assets it held in custody for customers, raising issues of whether and how these users can get reimbursed, Bloomberg News reported. The programs, Custody and Withhold, were similar, and allowed users to keep their digital coins in the lender while supposedly maintaining ownership of them. The programs’ users have been claiming that they shouldn’t be lumped together with other unsecured creditors and should be reimbursed in full. In her interim report, examiner Shoba Pillay found that Celsius launched the Custody program “without sufficient accounting and operational controls or technical infrastructure.” As a result, Custody wallets were overfunded through June 10, but then became underfunded by $50.5 million — a 24% shortfall — by June 24. With the Withhold program, “no effort was made to segregate or separately identify any assets” associated with the accounts, the report said. “As a result, customers now face uncertainty regarding which assets, if any, belonged to them as of the bankruptcy filing,” Pillay wrote in the report. The findings may complicate customers’ efforts at reimbursement.

The saga of Sam Bankman-Fried‘s bankrupt crypto empire isn’t just about collapsing tokens, missing billions and sunny offshore tax havens; there were also red flags in its books, the Wall Street Journal reported. At the core of FTX Trading Ltd.’s financial statements was a series of related-party transactions. But the company didn’t say who those parties were. On its balance sheet, the largest asset as of Dec. 31 was a “related party receivable” valued at $1.2 billion, or 44% of its assets. Its liabilities included a $362 million “related party payable.” FTX Trading last year paid $250 million, or 25% of its revenue, to an unnamed related party for “software royalties,” as previously reported by The Wall Street Journal, which viewed the documents. As a closely held company, FTX Trading didn’t disclose its financial statements publicly, though they were shared with investors. In a footnote to the financial statements, the company said its “primary shareholder is also the primary shareholder of several related entities which do business with the company.” It didn’t say who the related parties were for any specific transaction it disclosed.

FTX in an emergency court filing yesterday said that evidence suggests Bahamian regulators directed former CEO Sam Bankman-Fried to gain “unauthorized access” to FTX systems to obtain digital assets belonging to the company after it had filed for bankruptcy protection, CNBC.com reported. The filing said that Bankman-Fried transferred those assets to the custody of the Bahamian government. It cites an interview published by Vox on Wednesday where Bankman-Fried expresses serious disdain for regulators. “F--- regulators,” he said in the interview. “They make everything worse. They don’t protect customers at all.” “You know what was maybe my biggest single f----p?” he asked. “Chapter 11.” The accusations were made by FTX in a motion in the U.S. Bankruptcy Court in Delaware. In that motion, FTX said the alleged conduct puts “in serious question” a request by Bahamian regulators for recognition as liquidators in the bankruptcy.

Cryptocurrency lender Genesis was seeking an emergency loan of $1 billion from investors before it told clients it was suspending redemptions this week, as the shockwaves from FTX’s collapse continue to reverberate through the crypto industry, the Wall Street Journal reported. A confidential fundraising document viewed by The Wall Street Journal states that Genesis needed access to the credit facility by 10 a.m. Monday, citing a “liquidity crunch due to certain illiquid assets on its balance sheet.” The firm didn’t get the money. “There is an ongoing run on deposits driven mainly by retail programs and partners of Genesis (i.e., Gemini Earn) and institutional clients testing liquidity,” the document says. Gemini Earn is a yield-bearing product offered by Gemini, a cryptocurrency exchange. A spokeswoman for Genesis said that the document was prepared over the weekend and is no longer current. The firm is having “very positive conversations” with potential investors to shore up its liquidity, she added. “Genesis had been exploring all possible options amidst the liquidity crunch resulting from the FTX news,” the spokeswoman said. “After reviewing a number of options, we made the difficult decision to temporarily suspend redemptions and new loan originations in the lending business so that we can identify the best solution and outcome possible for clients."