Boxmining v2

Author: Angela Wang

  • What will happen to BlockFi?

    What will happen to BlockFi?

    BlockFi is a company that specialises in providing cryptocurrency lending services to clients worldwide. In our previous article, we reported that since 11th November 2022, BlockFi has paused its client withdrawals. Their reason for this was because of the “lack of clarity” in the status of FTX.com, FTX US and Alameda. Now the question is, what will happen to BlockFi? Will they also go bankrupt like FTX?

    What is BlockFi?

    BlockFi was founded in 2017 by Zac Prince and Flori Marquez. The aim of BlockFi was to create credit services for those with limited access to simple financial products. Their financial products included borrowing using crypto as collateral, the ability to earn crypto interest rates, and trading, among others.

    BlockFi prides itself as the only independent lender and is backed by notable investors such as Valar Ventures, Fidelity, Akuna Capital, and Coinbase Ventures to name a few.

    What is happening to BlockFi?

    Since 11th November 2022, BlockFi has paused its client withdrawals due to “lack of clarity” in the status of FTX.com, FTX US, and Alameda. Wire withdrawals and loan processing have also been delayed since 10th November 2022 but are expected to resume on 14th November 2022. When BlockFi users access the website, there is a banner warning them that client withdrawals have been paused. BlockFi also reminds users not to make deposits to the BlockFi Wallet or Interest Accounts for the time being.

    BlockFi suspends withdrawals
    BlockFi suspends withdrawals

    What is happening to BlockFi cards?

    BlockFi’s BlockFi Rewards Visa Signature Card was one of the first cryptocurrency rewards credit cards in the market. The BlockFi card’s major benefits include 1.5% crypto rewards on every single purchase, which can go up to 10% for spending with BlockFi’s partners.

    However, there have been people reporting that purchasing privileges on the BlockFi card have been suspended “until further notice”. This means that cardholders can no longer make purchases using the BlockFi card.

    BlockFi card services have been suspended

    This development stems from the fact that payments company Curve is in active negotiations with BlockFi to acquire their over 87,000 credit card customers. According to reports, if the negotiation is successful, Curve will take over the BlockFi card program, and aim for customers to still be able to earn crypto rewards as they did before.

    Is BlockFi in trouble?

    In June 2022, FTX US had extended a US$400 million line of credit to BlockFi with an option for FTX us to acquire BlockFi for a variable price of up to US$240 million. However, the collapse and bankruptcy of FTX have put the future of BlockFi in question for some. This is compounded by the fact that California’s Department of Financial Protection and Innovation (DFPI) said on 11th November 2022 that they were suspending BlockFi’s lending license for 30 days. During this suspension, the DFPI will be conducting investigations into BlockFi.

    BlockFi has also admitted in its latest update that it had “significant exposure” to FTX and their associated companies. However, they deny they had a majority of funds held at FTX. To learn more, check out our article- Were BlockFi’s assets held on FTX?

    BlockFi files for bankruptcy

    On 28th November 2022, BlockFi announced it had filed for Chapter 11 bankruptcy in the United States. This latest development comes after speculation has already been brewing in the past few weeks that it was affected by the collapse of FTX exchange. The bankruptcy will include Blockfi and 8 of its subsidiaries.

    According to Court documents, BlockFi has over 100,000 creditors. The company has both assets and liabilities in the range of US$1-10 billion and US$256.9 million cash on hand.

    Therefore, the future of BlockFi is still uncertain, and there is fear that it may go bankrupt like the FTX Group. However, there is currently no official announcement or news that BlockFi will be filing for bankruptcy.

    How much does FTX owe BlockFi and vice versa?

    During BlockFi’s bankruptcy hearing, the company revealed it has US$355 million stuck on FTX. Further, Alameda Research, an associated company of FTX, has defaulted on its US$680 million loan from BlockFi.

    On 28th November 2022, BlockFi had also sued Emergent Fidelity Technologies, a company owned by FTX’s Sam Bankman-Fried. The purpose of the lawsuit was to seek SBF’s shares in Robinhood that were used as collateral as part of a pledge agreement.

    On the other hand, on 1st July 2022, FTX US extended a US$400 million line of credit to BlockFi. Of this, BlockFi still owes FTX US US$275 million as allegedly agreed to by 89% of its shareholders. The purpose of the loan was to help BlockFi after it was affected by the collapse of Terra’s stablecoin in May this year. The loan was originally set to mature on 30th June 2027 and had an interest rate of 5% per annum.

    What will happen to BlockFi?

    On 28th November 2022, BlockFi had its first bankruptcy hearing. During this hearing, BlockFi expressed that it will intend to seek the Court’s approval to restore withdrawals for BlockFi wallet holders. However, no formal application has been made yet and the Court has not made a decision on whether withdrawals will be reopened to customers.

    BlockFi’s next bankruptcy hearing is presently scheduled for 9th January 2023 at 10:00 EST.

  • Binance Funding Rates: What is it and how to profit from it?

    Binance Funding Rates: What is it and how to profit from it?

    Binance is the world’s most visited and used centralized cryptocurrency exchange in the world. The exchange has over 2 billion average daily volume and over 1.4 million transactions per second. The Binance ecosystem includes not only Binance exchange, but also BNB Chain, Trust Wallet, Binance card, and more. Many crypto traders like to take advantage of an exchange’s funding rates and fees to earn some profit and passive income. In this article, we look at how Binance funding rates and fees work, and how to profit from it.

    Sign up for Binance and enjoy 20% off fees!

    What is Binance?

    Changpeng Zhao (CZ) and Ye He founded Binance in 2017. Since then, Binance has become the world’s most popular cryptocurrency exchange with the largest organic trading volume. Binance is available in most countries, including the United States under Binance.us (with the exception of a few states). The exchange also supports 600 cryptocurrencies on its international site and over 130 cryptocurrencies on Binance.us.

    What are crypto funding rates?

    Crypto funding rates are periodic payments of the price difference between perpetual contract markets and spot prices. Funding payments are made either to/by long or short traders depending on the funding rate.

    Funding rates exist to align the perpetual contract price to the spot price. If the perpetual contract trading price is higher than the spot price, long position holders would pay short position holders. Conversely, if the perpetual contract trading price is lower than the spot price, short position holders pay long position holders.

    Learn more about crypto funding rates with our article: Crypto funding rates: How it works and how to earn passive income

    What are Binance funding rates?

    As mentioned above, the purpose of funding rates is to prevent continued differences between the price s fo the perpetual contract markets and spot prices. Therefore, crypto funding rates are periodically recalculated. Binance recalculates its funding rates every 8 hours.

    Users can locate the funding rate, and when the funding interval expires at the top of the Binance Futures page. So as seen in the below screenshot, the funding rate is -0.0014% and the funding period will expire in 3 hours 26 minutes.

    Binance funding rate and expiry
    Binance funding rate and expiry (Source: Binance)

    How does Binance calculate the funding rate?

    Binance calculates the funding rate based on two factors: The interest rate, and the premium.

    Binance Futures generally fixes the interest rate at 0.03% per day (i.e. 0.01 per funding interval). However, for BNBUSDT and BNBUSD, the interest rate is 0%. Meanwhile, the premium fluctuates depending on the price difference between the perpetual contract and the mark price. A large difference, or spread, equates to a high premium. On the other hand, a low premium means there is only a narrow difference between the two prices.

    When the funding rate is positive, it means that the price of the perpetual contract is higher than the mark price. Whereas if the funding rate is negative, the perpetual prices are below the mark price.

    Binance uses the following formula to calculate funding rates:

    Funding Amount= Nominal Value of Positions x Funding Rate

    Where Nominal Value of Positions= Mark Price x Contract Size

    How are Binance funding rates paid?

    When the funding rate is positive, long traders pay short traders. On the other hand, when the funding rate is negative, the short traders pay the longs. On Binance, funding rates are paid between users i.e. peer-to-peer. This means Binance does not take any fees from users paying or receiving the funding rates.

    Funding payments are made every 8 hours at 00:00 UTC, 08:00 UTC, and 16:00 UTC. However, this can be subject to change in cases of extreme market volatility. Traders must have open positions 15 seconds before or after the specified funding times in order to be liable to pay or receive any funding fees.  

    How to profit from Binance funding rates?

    The purpose of funding rates is to encourage traders to take positions that allow the perpetual contract prices to be in line with the spot market. So, traders can develop strategies that allow them to take advantage of funding rates and profit from it.

    How to be notified of Binance funding rates

    Binance offers a notification feature where they will send you an email/SMS/in-app notification when the funding rate reaches a certain percentage. To activate this feature, log in to your account and go to “Derivatives” and then “USDⓈ-M Futures”. Then, click on the “notification” button, “preference” and then “notification”. Here, you can set the funding fee trigger. The default trigger is 0.25%, meaning that Binance will send you a notification when the funding rate reaches 0.25%.

    Crypto funding rate trends

    Crypto funding rates are correlated with the price trend of the underlying asset, as seen from historical data. So the spot market generally dictates the funding rate.

    The above diagram shows the correlation between Binance’s funding rates and Bitcoin prices for the period from 20 December 2019 to 20 January 2020. As can be seen, the rise in funding rates corresponds to a Bitcoin price pump.

    Traders can see Binance’s historical funding rates here.

    Sign up for Binance and get 20% off fees!

  • Were BlockFi’s assets held on FTX?

    Were BlockFi’s assets held on FTX exchange, which is now bankrupt, and its funds hacked?BlockFi provides lending services to clients across the globe. In our previous article, we reported that BlockFi has paused its client withdrawals since 11th November 2022 due to lack of clarity” on the status of FTX.com, FTX US and Alameda. 

    Does BlockFi have exposure to FTX?

    Shortly after BlockFi halted client withdrawals, the FTX Group filed for bankruptcy. Worse, FTX had been hacked and over US$600 million in funds were stolen. A lot of these funds belonged to FTX exchange users such as retail investors and even blockchain companies. Therefore, rumours have been swirling that BlockFi has substantial assets held in FTX.

    On 14th November 2022, BlockFi issued an update addressing the rumours that a majority of its assets were held on FTX. Admitting they have “significant exposure” to FTX and their associated corporate entities.

    On 28th November 2022, and during BlockFi’s bankruptcy hearing, the company revealed it has US$355 million stuck on FTX. On the other hand, Further, Alameda Research, an associated company of FTX, owes US$680 million to BlockFi.

    On 28th November 2022, BlockFi also sued Emergent Fidelity Technologies, a company owned by FTX’s Sam Bankman-Fried (SBF). The lawsuit seeks SBF’s shares in Robinhood that were used as collateral as part of a pledge agreement.

    Will BlockFi be able to recover any funds from FTX?

    According to BlockFi’s 14th November 2022 update, BlockFi “…will continue to work on recovering all obligations owed to BlockFi.” BlockFi, however, expects there will be delays in the recovery of assets from FTX. This is because FTX, FTX.US and Alameda have filed for bankruptcy.

    However, with the news that BlockFi has also filed for bankruptcy, it is starting to become uncertain whether BlockFi will be able to recover everything it has stuck on FTX.

    BlockFi assured users they were independent of FTX

    Previously, BlockFi Founder and COO Flori Marquez have assured users via Twitter that it is an independent business entity from FTX. Although, BlockFi does have a US$400 million line of credit from FTX.US (and not FTX.com). To learn more about the difference between FTX.com and FTX.us, check out our article- Key Similarities and Differences Between FTX.com and FTX.us

    Twitter post from BlockFi Founder and COO Flori Marquez

    What’s next for BlockFi?

    On 28th November 2022, BlockFi filed for bankruptcy. During its first hearing, BlockFi expressed it intends to seek approval to restore withdrawals from BlockFi wallets. However, no Court application has been made yet and the Court has not decided whether customers will be allowed to make withdrawals.

    BlockFi’s next bankruptcy hearing is presently scheduled for 9th January 2023 at 10:00 EST.

    To learn more, check out our other article- What will happen to BlockFi?

    FTX EXCHANGE (INCLUDING FTX INTERNATIONAL AND FTX.US) ARE NO LONGER IN OPERATION

    Both exchanges have filed for bankruptcy. Subsequently, the exchange was “hacked” and more than US$600 million worth of cryptocurrencies drained. The hacker is strongly rumoured to be a former FTX employee. For more about how this story unfolded and the latest news, check out these articles:

  • Is KuCoin safe from the collapse of FTX?

    Is KuCoin safe from the collapse of FTX?

    KuCoin is a cryptocurrency exchange launched on 15th September 2017 and has over 20 million users worldwide. The recent bankruptcy of the FTX Group and “hack” however have resulted in a “contagion effect” resulting in speculation as to which other crypto companies might collapse. In this article, we answer the question- is KuCoin safe from the collapse of FTX.

    What is KuCoin?

    KuCoin is a centralized cryptocurrency exchange, meaning that users’ cryptocurrency deposits are stored and held in custody by the exchange. KuCoin refers to itself as “The People’s Exchange” and is headquartered in Seychelles. The exchange has over 20 million users worldwide and 660 million US dollars in trading volume daily. This certainly puts them in the top 10 most popular exchanges in the market.

    How might the collapse of FTX affect KuCoin?

    On 11th November 2022, FTX, FTX US, and Alameda filed for bankruptcy in the United States. This came after several days of withdrawals being suspended on the exchanges and rumours already circulating that they were in trouble. On the same day, it was reported that over US$600 million were drained from FTX by a hacker. This hacker was eventually identified to be a former employee of FTX exchange. It was also revealed that one of the reasons for FTX’s collapse was because Alameda Research, which was FTX’s trading house, had burned through nearly US$10 billion in cash belonging to its clients.

    The collapse of FTX has brought the safety of all centralized cryptocurrency exchanges to the forefront. This is especially since FTX was one of, if not, the largest cryptocurrency exchanges. The revelations that FTX had been wrongfully handling client funds have also sent fear amongst cryptocurrency traders.

    As a result, in the days leading up to the announcement of FTX’s bankruptcy filing, cryptocurrency traders were rushing to withdraw their funds stored on exchanges. There were rumours circulating as to which crypto companies had funds on FTX. And, if so, how much and whether they would be affected by the collapse of FTX. Meanwhile, some cryptocurrency services such as BlockFi have also suspended withdrawals and are rumoured to be filing for bankruptcy. Of course, being a major exchange, KuCoin was also subject to rumours and questions about its solvency and whether they are safe from the FTX contagion.

    KuCoin addresses rumours of outflows following FTX collapse

    On 9th November 2022, KuCoin’s CEO Johnny Lyu wrote a letter addressing the FUD (Fear, Uncertainty and Doubt) surrounding the exchange. The rumour surrounding KuCoin originated from a stablecoin outflow chart by Nansen, a blockchain analytics firm. The flowchart showed that US$300 million had left the exchange. However, it was quickly clarified by Nansen CEO Alex Svanevik that the US$300 million was merely a swap from USDT network to Tron. Therefore, the funds had in fact not left KuCoin exchange.

    Nansen clarifies the alleged outflow of US$300 million from KuCoin

    In the letter, KuCoin also notes that it was probably the 10th time in 6 months that there are circulating rumours on Twitter that KuCoin is insolvent. It is also admitted that KuCoin did suffer a hack in 2020 with over US$275 million worth of cryptocurrencies, resulting in a liquidity crisis. However, KuCoin was able to cover 100% of their users’ funds and so users did not suffer any loss.

    As seen below, KuCoin has also denied having any exposure to FTX or its native FTT token.

    Does KuCoin have any exposure to FTX or FTT?

    Lyu has also clarified on Twitter that KuCoin does not have any exposure on FTX or FTT. This dispelled the speculation by Cobie, host of the UpOnly podcast.

    KuCoin FTX FTT exposure rumour
    Lyu dispels rumours that KuCoin has exposure on FTX or FTT (Source: Twitter)

    Is KuCoin safe?

    As seen above, KuCoin has already expressly denied they have any exposure to or deposited any funds at FTX. To reassure its users, KuCoin has promised to release its Merkle tree proof-of-reserves (POF) in one month.

    Meanwhile, Nansen has listed KuCoin’s portfolios and explanatory statements of accounts here.

    The “total assets” and “net worth” figures in the portfolio show the sum of the cryptocurrencies in the wallet addresses provided by KuCoin. These wallets are continuously monitored by Nansen, although they cannot be taken as a complete statement of the actual assets or reserves held.

    On 11th November 2022, Lyu also provided an overview of their hot and cold addresses and holdings. KuCoin’s holdings as of 7:00 UTC on 11th November 2022 comprised of 20,504 BTC, 180,299 ETH, 1,075,909,241 USDT, 365,722,839 USDC, and 69,601,075 KCS.

    KuCoin wallet holdings

    As mentioned, KuCoin is working on the Merkle-tree proof-of-reserves. The exchange is also expecting the completion of an audit by third-party auditor Aarmanio LPP. Both are expected to be completed in a month’s time i.e. in around early December 2022.

    Therefore, it seems that KuCoin exchange is safe from the FTX collapse for now. However, users are still recommended to keep their funds off of any exchanges. Instead, users should consider storing their cryptocurrencies in hardware wallets as it means the cryptocurrencies are in their own custody. Check out our reviews for some popular hardware wallets:

  • FTX, FTX US and Alameda File for Bankruptcy

    FTX, FTX US and Alameda File for Bankruptcy

    Sam Bankman-Fried (SBF), Founder of FTX, FTX US and Alameda has announced on Twitter that he has filed for Chapter 11 bankruptcy proceedings in the United States.

    SBF files FTX, FTX US and Alameda for bankruptcy in the US

    The Chapter 11 bankruptcy proceedings affects FTX International, FTX US, Alameda and 130 other affiliated companies.

    On the same day, Sam Bankman-Fried also resigned from his position as CEO of the FTX Group. John J. Ray III is now the current CEO of the FTX Group.

    The purpose of initiating the Chapter 11 proceedings is to give the FTX Group the opportunity to assess its situation. It also allows the Group to develop ways to hopefully maximize recoveries for stakeholders.

    In the same tweet, SBF stated that he is working on “giving clarity on where things are in terms of user recovery ASAP.” There are no further announcements or indications of when users will be able to withdraw their funds. FTX International users have not been able to withdraw their funds since 8th November 2022, and FTX US users have been unable to withdraw their funds since 10th November 2022.

    This latest development comes as negotiations for other companies to acquire FTX International, most notably from Binance, had fallen through.

    To learn more about Binance’s previous plan to rescue FTX International, click here. Also, check out our article on the “war” between SBF and CZ which started the recent cascade of events.

    What happens next?

    If the FTX Group does eventually go down the bankruptcy route, the assets and liabilities of the Group, and the affected stakeholders would need to be identified. And the Group’s assets potentially liquidated. (www.biolighttechnologies.com) Distribution of users’ funds (if any) will only occur at the final stages of the proceedings, which could be years away.

    Therefore, affected users are recommended to access their accounts and collect screenshots or downloads of all deposits, withdrawals, balances, and account information. It is suggested to keep this information safe in case it becomes necessary in future proceedings.

    Download FTX account information
    Download FTX account information

    To download your account and transaction records on FTX, access your FTX account. Then, simply go onto the relevant Balances, Deposits, or Withdrawals tab, and click on the small cloud icon. This will download a .csv file containing your transaction records.

  • BlockFi suspends withdrawals over unclear status of FTX

    BlockFi suspends withdrawals over unclear status of FTX

    BlockFi is a company specialising in providing cryptocurrency lending services to clients worldwide. In a tweet on 11th November 2022, BlockFi stated they are unable to “operate business as usual” and will be pausing client withdrawals.

    BlockFi announces it will suspend withdrawals

    BlockFi states their decision to suspend withdrawals is due to a “lack of clarity” over the status of FTX.com, FTX US, and Alameda Research. Resulting in them being unable to operate their business as usual.

    Learn more about the current crisist at FTX and what will happen now that the plan for Binance to acquire FTX has fallen through here.

    To reassure users, BlockFi has stated that they will remain in communication with their users, albeit less frequently than they are used to. The Company’s Founder and COO, Flori Marquez had also previously reassured BlockFi users in a tweet that BlockFi is an independent business entity until at least July 2023. Furthermore, they have a US$400 million line of credit from FTX.us (and not FTX International- which is the subject of the current crisis). This US$400 million loan would allow FTX.us to acquire BlockFi if certain conditions were met, such as clearance from the SEC, and having at least US$10 billion in client assets.

    BlockFi website
    BlockFi website currently does not show they have any issues with withdrawals

    We noticed that when accessing the BlockFi website, there is no warning banner indicating that withdrawals are suspended and their News page does not show the latest Twitter announcement. Therefore, the only place to get the latest updates from BlockFi is via their official Twitter account and we would suggest affected BlockFi users check it frequently.

  • Voyager Digital goes bankrupt: A victim of the Three Arrows Capital collapse?

    Voyager Digital goes bankrupt: A victim of the Three Arrows Capital collapse?

    Voyager Digital is a publicly listed crypto brokerage firm which filed for bankruptcy on 5th July 2022.

    Who is Voyager Digital?

    Voyager Digital was founded in 2017 as a cryptocurrency brokerage firm allowing clients to buy and sell cryptocurrencies and other digital assets on its platform. Their main feature was that they did not charge commission fees through utilizing its smart order routing to connect to dozens of other cryptocurrency exchanges and market makers. Voyager Digital is currently listed on the Toronto Stock Exchange under the stock ticker VOYG.

    Voyager Digital is also a major creditor of Three Arrows Capital, which has also recently filed for bankruptcy. Since 1st July 2022, Voyager Digital has temporarily suspended all trading, deposits, withdrawals, and loyalty rewards on its platform.

    Voyager Digital files for bankruptcy

    Voyager Digital issued a Notice of Default against 3AC on 27th June 2022 and reduced its withdrawal limit to US$10k per day. This spooked shareholders and users of Voyager Digital. The Company saw its share prices plunge over 60% after its ties with 3AC was revealed, combined with its poor performance during the crypto downturn.

    The Notice stated that 3AC failed to make timely repayments on its loan of 15,250 BTC and US$350 million USDC. However, Voyager Digital has reassured its users that its platform is still fully functional. Furthermore, as of 24th June 2022, Voyager had approximately US$137 cash and crypto assets on hand. The Company also has US$200 milllon cash and USDC, and a 15,000 BTC revolving loan from Alameda Ventures Limited.

    On 5th July 2022, Voyager Digital Holdings filed for bankruptcy in the Southern District of New York. Voyager Digital estimates it has over 100,000 creditors and total debts of somewhere between US$1 to US$10 billion in liabilities. The Company believes that notwithstanding its liabilities, it still has around US$1 to US$10 billion in assets. They also assure that will have sufficient funds available for distribution to its unsecured creditors.

    According to a tweet by CEO Stephen Ehrlich, the purpose of filing for bankruptcy was to “…protect assets on the platform, [and] maximize value for all stakeholders.”

    This is certainly a huge relief to Alameda Research. They are listed in court documents filed by Voyager as its largest unsecured creditor with over US$75million in unpaid debts. This is substantially larger than its second largest unsecured creditor with a US$9.7million claim.

    Meanwhile, the share prices of Voyager Digital Ltd (VYGVF) plummeted by almost 12% as a result of this development. Share prices for the Company took a huge hit since their involvement with 3AC was discovered. VYGVF share prices have been down nearly 89% since early June 2022.

    FTX to bail out Voyager Digital?

    FTX exchange recently secured a winning bid of US$1.42 billion for Voyager Digital’s assets. The assets included in the bid include (i) the fair market value of all of Voyager’s cryptocurrency at a future date to be determined, worth around US$1.3 billion; and (2) additional consideration of “incremental value”, worth around US$111 million. As for Voyager’s claims against Three Arrows Capital, this will remain with the bankruptcy estate and any amount eventually recovered will be distributed to the estate’s creditors.

    The tentative plan from FTX will allow all priority claimants to be paid out in full. Meanwhile, other account holders would be able to recover approximately 72% of their account value. The plan for FTX to buy out Voyager’s assets however is still pending the approval of Voyager’s creditors and the Court.

    Voyager Digital suspends withdrawals, will customers get their USD and crypto back?

    According to the latest blog post from Voyager Digital, they are working to restore access to customers’ USD deposits. However, it does not mention when withdrawals will be reopened. Voyager Digital also alleged that customers’ USD in their Voyager cash account is held in a For Benefit of Customers account at the Metropolitan Commercial Bank of New York (and not by Voyager themselves) and is Federal Deposit Insurance Corporation (FDIC) insured. However, a joint letter dated 28th July 2022 from the Federal Reserve and the FDIC to Voyager requests them to remove “false and misleading” statements that its user deposit accounts are FDIC insured.

    As for customers’ cryptocurrencies, Voyager states that they have approximately US$1.3 billion worth of crypto assets on their platform. This is inclusive of its over US$650million claim against Three Arrows Capital.

    Voyager has proposed a reorganization plan which is currently pending the approval of the Court. Customers will be able to select the following options with regards to their cryptocurrencies held by Voyager:

    1. Pro-rata share of cryptocurrencies;
    2. Pro-rata share of proceeds recovered from Three Arrows Capital;
    3. Pro-rata share of common shares in Voyager after it is reorganized; and
    4. Pro-rata share of existing Voyager tokens.

    However, according to Voyager, this is not the finalized plan. Voyager’s customers will have the opportunity to vote on whether or not they agree with the reorganization plan. It is likely that it will be a long time before customers will have their funds and cryptocurrencies returned.

    Voyager details claim process for customers

    Voyager’s blog post details how affected customers with cryptocurrencies in their accounts can begin to claim their crypto. Voyager will be sending an email from “Voyager Digital Restructuring” containing a unique link and personal identification number. The link will set out the customers’ account holdings. If customers agree with the account information set out in the email, they are not required to submit a claim form. On the other hand, if customers disagree with the information, or the claim is marked as “contingent”, “unliquidated” or “disputed”, they must submit a proof of claim form. This Proof of Claim form must be filed on Voyager’s case website on or before 3rd October 2022 at 5:00pm EST.

    However, there is still no information on when affected customers can actually receive the cryptocurrencies locked in their Voyager Digital accounts.

    Voyager customers say no to “retention bonus” totaling US$1.9 million to employees.

    Voyager had asked the Court to approve a US$1.9 million payment to 38 of its employees as a “retention bonus”. The Company claims that these employees are essential to its continued operation and restructuring, and are apparently non-executive employees. Voyager is also asking the Court to allow them to redact the names, titles, salaries, proposed bonuses and other information relating to the 38 persons. Their reasoning is that this is non-public and personal information which could be sensitive.

    However, a group of Voyager customers objected to Voyager’s proposal, stating that its employees are already well-compensated and that there is little evidence that they plan to resign. They also argue that the Company has otherwise done little else to reduce costs. The US Trustee’s Office is also objecting to Voyager’s proposal, particularly to the request to redact the employees’ information. This is because they see it as critical information that stakeholders should have in order to evaluate whether the proposed bonus is necessary.

    On 24th August 2022, the Court ultimately approved Voyager’s application to pay US$1.9 million in retention bonuses to employees.

  • Aries Market Guide

    Aries Market Guide

    Aries Market is a decentralized cryptocurrency exchange built on Move, the same programming language used by Aptos to build its blockchain. Aries Market provides a wide range of decentralized finance (DeFi) products such as borrowing, lending, and margin trading on 1 single platform. Products include lending, borrowing, margin trading, swapping, and account risk management.

    What is Aries Market?

    Aries Market is a decentralized crypto exchange offering a wide range of DeFi products on a unified platform. On Aries Market, users can have a unified margin account on which they can borrow from various liquidity pools, earn interest on deposits, and do swaps and trades.

    What products are available on Aries Market?

    Aries Market is currently in a “soft launch” phase where all its features are not available yet. At present, the following products are available on Aries Market: lending, borrowing, swaps, and global account management. Notably, trading features are not yet available on Aries Market.

    There are, however, deposit limits for the available asset pools on Aries Market. The limits are as follows: 4 million zUSDC (LayerZero), 4 million USDC (Wormhole Bridge), 500,000 APT, 10,000 SOL.

    Aries Market
    Aries Market

    Supported assets

    Aries Market currently supports the following assets: zUSDC (LayerZero), USDC (Wormhole Bridge), APT and SOL. The team expects more assets to be listed soon.

    Coming soon on Aries Market

    The Aries Market team expects the following features to be available in the coming months:

    • Full set of features will be available on Aries Market;
    • integration of Aries Market with Aptos; and
    • Gamified events and campaigns on the Aries Market and Aptos community.

    Learn more about Aries Market

    Twitter

    Medium

    Website

  • Ethereum ($ETH) Merge: What is it and everything you need to know

    Ethereum ($ETH) Merge: What is it and everything you need to know

    As Ethereum is steadily approaching the transition to a Proof-of-Stake mechanism, one notable thing that has changed, aside from further protocol development, has been the change in terminology.

    We have already covered Ethereum 2.0 extensively in one of our ongoing blogs where we go in-depth on everything you need to know about Ethereum’s transition to PoS:

    Let’s take a closer look at the rebranding from Ethereum 2.0 to the Ethereum Merge, as well as go over the most recent developments in Ethereum’s roadmap as of May 2022.

    Check out our latest video- Ethereum Merge: ALL you need to know (including ETHPOW)

    Ethereum Merge: ALL you need to know (including ETHPOW)

    And check out our video- Ethereum Merge: Things you don’t (but need) to know as an investor

    The Ethereum Merge: Why the shift from Eth2.0?

    The move away from using the former term “Eth2.0” that signified the final transition from PoW to PoS was a result of several different developments and considerations, both technical and cultural.

    On the technical side, the use of Eth2.0 started to become an inaccurate representation of the PoS transition. Originally, the Ethereum 2.0 roadmap envisioned that both the Phase 0 (Beacon Chain) and Phase 1 (Sharding) would be completed before the final transition. (Clonazepam) But the Beacon Chain was developed faster than expected, making researchers realize that the final migration to a PoS mechanism would be delayed by years due to the focus on sharding. In addition, the ever-growing pressure from the masses about the environmental impact of PoW chains made the migration to PoS that much more pressing.

    As the Beacon Chain was deployed, Ethereum L2 rollups started gaining popularity, demonstrating significant scalability potential even for a non-sharded Ethereum blockchain. This released some pressure on solving the scalability challenges that Ethereum’s L1 has faced for years, allowing the R&D team to focus on the remaining Ethereum’s upgrade plans both for the PoW chain, as well the Beacon Chain.

    From a cultural perspective, the use of the old terminology would’ve further perpetuated confusion about the nature of Eth1.0 and Eth2.0, making it seem like once Eth2.0 is launched, Eth1.0 will be gone, which is not the case. In addition, scam prevention was another consideration that favoured the rebrand, as the distinction between Eth1.0 and Eth2.0 would’ve likely resulted in scammers trying to convince users to swap their ETH tokens for fictitious ETH2 tokens.

    The result of all of this was a decision to move away from the confusing Eth1.0 and Eth2.0 terminology, and rather call the transition to the PoS mechanism on the mainnet The Merge. By choosing to name the process instead of the final outcome (which in reality remains, in essence, the same), a lot of headache and confusion has been avoided.

    Progress Towards The Ethereum Merge: Current status 

    Public testnets being battle-tested

    Deployed in late December 2021, the Kintsugi testnet was a public testnet meant to allow execution and consensus client developers and application developers to become familiar with the post-Merge environment. The testnet was bombarded with transactions, bad blocks, and chaotic inputs to battle test it and find bugs.

    A new specification for the proceeding public testnet, called Kiln, was published after edge cases from Kintsugi had been discovered. It’s expected to be the last new public testnet to be created before the existing ones are upgraded. Continued extensive testing of the Kiln has been taking place since The Merge took place on it on March 15th 2022. The Ethereum community practised running their nodes, deployed contracts, tested infrastructure, and threw everything they had at it to see if it breaks.

    Mainnet shadow forks

    Although a lot had been learned since deploying and testing Kintsugi and Kiln testnets, they were still very young testnets with little activity, which prevented proper stress testing of assumptions regarding syncing and state growth. And this is where shadow forking came in. Shadow forking makes it possible to fork an existing testnet, such as Goerli, and the mainnet (with a lot more activity), and add merge related properties to its config, thus allowing the fork to inherit the state of the original testnet.

    These shadow forks are short-lived, allowing for testing on them only for a few weeks until a new beacon chain has to be spun up.

    Three Goerli testnet shadow forks took place in January and March, and the first mainnet shadow fork happened on April 11th 2022, with the second one following on 23rd April.

    The results of the latest mainnet shadow fork have been described by Adrian Sutton from ConsenSys in his twitter thread. The team will continue stress testing main forks, and collaborate with client developers to make them even more robust against edge cases. From now on the main theme as we approach The Merge has been and will be – testing, testing, and even more testing.

    Wen Merge? The Triple Halvening, And Price Predictions

    As to when The Merge will happen is still somewhat up in the air. No one has, understandably, given any specific dates, but the general consensus is that late Q3 is the time when we are likely to see it finally happen. The dev team’s sole focus is on The Merge, with very little else discussed, as can be seen in the latest AllCoreDevs session update by Tim Beiko.

    Price predictions are also under hot debate, as, once The Merge is complete, two factors will influence ETH’s price, one emotional, the other baked into the protocol. Realistic estimates of the fair price of ETH fluctuate around $5000.

    The emotional aspect, as experienced by the market, will result from The Merge successfully completing, which will mark the end of the most significant change in the protocol in Ethereum’s history, and solidify the incredible technical competence of Ethereum core devs and researchers, further giving the market confidence in ETH as an asset and the ecosystem as a whole, driving up the price further.

    The technical reason for why price is likely to pump is due to the Triple Halvening, which will reduce Ethereum’s annual inflation rate from 4.3% to 0.43%. Following last year’s EIP-1559 upgrade, Ethereum now burns about 70-80% of the fees, with the rest going to PoW miners. Post Merge, these fees will go to the PoS validators. This means that ETH stakers will see their rewards rise to about 8-10%. Staking will lock in significant amounts of ETH, as staked ETH cannot be moved or used in the markets, making enormous amounts of ETH illiquid, further driving up the price. EIP-1559 and The Merge combined are predicted to cause the equivalent of 3 bitcoin halvenings, reducing ETH sell pressure by up to 90%.

    In addition, the move to an environmentally friendly PoS mechanism, which will reduce energy consumption by up to 99.95%, will make the asset much more appealing to institutional investors who might’ve been kept away from investing due to public’s pushback on Ethereum’s current energy consumption.

    Great progress is being made by the Ethereum team, and the continued successful merges of mainnet forks clearly demonstrate the culmination of 6 years of back-breaking work, and give hope that The Merge truly is just around the corner. For those interested in the nitty-gritty of The Merge preparations, it’s worth checking out The Merge Mainnet Readiness Checklist which lists in detail all of the various tasks that need to be worked through to make The Merge ready for Mainnet release.

    Why is the Ethereum Merge so important to crypto traders?

    Many cryptocurrency and particularly Ethereum ($ETH) traders are eagerly anticipating the Ethereum Merge because afterward, the issuance of ETH is expected to be reduced by about 90%. This means there will be less ETH in circulation, and in turn, the lower the supply, the higher the demand- potentially resulting in Ethereum prices going up.

    ETH Merge is a huge success!

    On 15th September 2022 at 06:42:42 UTC at block 15537393, the Merge was completed.

    Missed our historical LIVE Merge party? Check it out here!

    Ethereum Merge Party – Watch the Merge live!

    How have Ethereum ($ETH) prices reacted to the Merge?

    Ethereum ($ETH) prices showed a slight pump in the hours following the Merge. Prices hit a peak of over US$1,640 before coming back down to just under US$1,600. The next crucial point in terms of where ETH prices would go would depend on whether there is any hard fork.

  • Three Arrows Capital (3AC): Rise and fall of a crypto hedge fund giant

    Three Arrows Capital (3AC): Rise and fall of a crypto hedge fund giant

    What is Three Arrows Capital?

    Three Arrows Capital (3AC) is a Singaporean cryptocurrency hedge fund founded in 2012 by Kyle Davies and Su Zhu.

    Learn more in our latest video: How did Three Arrows Capital (3AC) Fall from the Top?

    How did Three Arrows Capital (3AC) Fall from the Top?

    The rise of Three Arrows Capital

    At its peak, they backed successful and hugely popular cryptocurrency projects such as Aave, Ethereum, Polkadot, Solana, and WOO Network, among others. The Fund reportedly had a net asset value of US$18 million according to their last public statement.

    Founders Kyle Davies and Shu Zu were also famous in the cryptocurrency space, with 49k and over 550k Twitter followers respectively.

    The fall of Three Arrows Capital

    The fall of Three Arrows Capital can be largely attributed to 3 factors: the Axie Infinity hack, the collapse of Terra (LUNA, UST) and failure to meet margin calls.

    Axie Infinity hack

    Axie Infinity was a “play to earn” blockchain game which at its peak had millions of players worldwide. However, declining popularity and becoming the victim of a US$700m hack in March 2022 caused a huge and seemingly irrevocable blow to the game.

    Learn more- Axie Infinity: A lesson for the future of play-to-earn.

    Collapse of Terra (LUNA, LUNC, UST, USTC)

    In 2018, Terra was founded by Do Kwon and Daniel Shin. Terra is an open-source blockchain that hosts decentralized applications (dApps) and developer tools. Terra has a native token- $LUNA (now Terra Luna Classic $LUNC), which is used for governance and mining. LUNA has to be burned to mint UST (now Terra Classic USD $USTC) at a ratio of 1:1. This was the only way to obtain UST and take advantage of the various interest rates through staking on the Terra ecosystem. This meant that LUNA was an algorithmic stablecoin i.e. a stablecoin that can only maintain its peg via software and rules.

    The risk of these algorithmic stablecoins and why so far they have all failed is because of the “death spiral”. This is a series of events that inevitably led to the demise of a protocol. On 7th May 2022, over US billion worth of UST was unstaked and hundreds of millions worth sold. (Tramadol This huge sale caused prices of UST to fall to 91 cent (i.e. it was no longer maintaining its peg). This caused huge panic in the market with UST holders frantically selling their UST to mitigate their losses, which pushed UST prices further down. A week later on 13th May 2022, prices of UST had already fallen to US$0.01.

    Three Arrows Capital was unfortunately caught up in Terra’s collapse since it was heavily invested in LUNA. According to a Twitter post from a whistleblower known as FatMan, Three Arrows Capital purchased 10.9 million locked LUNA for US$559.6 million. However, since the collapse, this LUNA was only worth US$670.45.

    In a recent development, a court in Seoul, South Korea issued an arrest warrant against Do Kwon and 5 others who are all currently in Singapore. The 6 persons are accused of violating South Korea’s capital markets law.

    Failure to meet margin calls

    As a result of suffering losses from the Axie Infinity hack, the Terra collapse, and the crypto market downturn, Three Arrows was unable to meet margin calls from its various lenders. According to the Financial Times, some of these lenders included US-based crypto lender BlockFi, which Three Arrows Capital had borrowed Bitcoin from and was now unable to repay.

    Cryptocurrency options and futures exchange Deribit was also chasing down Su Zhu and Kyle Davies as they both kept a low profile since the collapse of Three Arrows Capital. Uncovered messages from Deribit Exchange’s representatives reveal that they have been trying to contact Su Zhu and Kyle Davies in vain. The messages also reveal that Deribit had sold US$85 million worth of BTC and ETH in an attempt to reduce Three Arrows’ position. Deribit also suggested that Three Arrows use their 32 million USDC as collateral.

    Three Arrows Capital liquidation

    Three Arrows Capital filed for Chapter 15 bankruptcy on 1st July 2022 in New York. The purpose of a chapter 15 bankruptcy is to prevent creditors from seizing a company’s assets located in the US. Meanwhile, liquidation proceedings will continue in the British Virgin Islands where Three Arrows is based.

    According to court documents, Three Arrows Capital owed US$3.5 billion to 27 different companies including Voyager Digital. Voyager Digital is a publicly listed crypto brokerage firm that suspended trading and withdrawals shortly before the news of 3AC’s bankruptcy. Other sizable creditors included Genesis Global Trading, which had lent US$2.36 billion to Three Arrows Capital.

    Court documents also gave insights as to the remaining assets owned by Three Arrows Capital. These consist of cryptocurrencies such as Bitcoin, Avalanche, and Near, as well as shares of Grayscale Bitcoin Trust and in Deribit. In total, these remaining assets are worth at least US$2.8 billion. In particular, the court document estimated the Deribit shares to be worth around US$500 million. However, as reported by CoinTelegraph, there are anonymous sources that claim the value of the Deribit shares is in fact only around $25 million. The consequence of this is it is possible there will not be sufficient assets to repay all of Three Arrows Capital’s creditors.

    Su Zhu and Kyle Davies sues Three Arrows Capital.

    Both Su Zhu and Kyle Davies’ whereabouts are currently unknown. Previously, the court issued an order allowing Three Arrows Capital liquidators to demand the pair attend court. It was also revealed that Zhu and Davies were uncooperative with their liquidators. According to a legal document filed by Three Arrows Capital’s liquidators, there were Zoom calls with a “Su Zhu” and “Kyle”. However, it could not be confirmed that it was indeed them because their video was switched off. Also, their audio was muted with neither of them speaking despite being asked questions.

    However, it appears that whilst Su Zhu was filing a claim for US$5 million against Three Arrows Capital- his own fund. Kyle Davies also filed an affidavit stating that his wife, Kelli Chen also lent US$65.7 million to Three Arrows Capital.

    Su Zhu and Kyle Davies buy a yacht with borrowed funds?

    According to a legal document filed by the liquidators of Three Arrows Capital, Su Zhu and Kyle Davies made a down payment on a US$50 million yacht. The founders had boasted that the yacht would be larger than any owned even by Singapore’s richest billionaires. It is speculated that the yacht was purchased with borrowed funds.

    Three Arrows Capital CEO Su Zhu to sell US$34.8mil bungalow after liquidation

    CEO of Three Arrows Capital Su Zhu is apparently urgently trying to sell the US$34.8mil bungalow in Singapore after 3AC filed for bankruptcy. The 31,854 sq ft bungalow was purchased in December 2021 and was held on trust for his 6-year-old son. According to text messages circulating among property agents, the bungalow is being put up for “very urgent sale”

    Zhu and his wife own 3 properties between them including the bungalow which they are planning to sell, spending over US$59.5 million.