U.S., FTX, Andrew Varra discussed on The Crypto Overnighter


Here, encrypted, it's 10 p.m. Pacific time, my name is nicodemus and welcome back to the crypto overnighter, where we take a nightly look at the crypto NFT and metaverse space, and keep in mind nothing in this show should ever be considered financial advice. It's Friday, December 2nd, 2022, and welcome to the weekend. You made it. Now let's go. The United States trustee handling FTX bankruptcy proceedings has referred to the now defunct exchange as they quote fastest big corporate failure in American history. And so now they're calling for an independent investigation into its sudden downfall. In a December 1st motion U.S. trustee Andrew varra noted that over the course of 8 days in November, the value of the company's assets quote suffered a virtually unprecedented decline. Now this is from a market high of $32 billion earlier this year to a severe liquidity crisis following a run on the bank. Vara has called for an independent examination of FTX stating that it is, quote, especially important because of the wider implications that FTX has collapsed may have for the crypto industry. An independent examiner has been called in to investigate the bankruptcy. This type of examiner is typically brought in when it is in the interest of creditors or when unsecured debts exceed $5 million. Independent examiners have been called in other high profile bankruptcy cases like Lehman Brothers and more recently Celsius as part of its ongoing chapter 11 case. Now you can calling for the independent examination of FTX, the U.S. trustee handling the case stated quote the questions at stake are simply too large and too important to be left to an internal investigation. So in a motion filed on December 1st, the trustee argued that the appointment of an examiner, which requires the approval of the judge, would be in the interest of customers and other interested parties. The examiner would be able to quote investigate the substantial and serious allegations of fraud, dishonesty, incompetence, misconduct, and mismanagement by FTX. Now this motion also suggests that the examiner could look into the circumstances, surrounding FTX collapse. The movement of customer funds off the exchange and whether entities that have lost money on FTX can claim back those losses. The U.S. trustee has acknowledged that some parties may be concerned about the costs and potential overlap with the company's internal investigation. But has emphasized the importance of appointing an independent examiner to investigate the company's sudden collapse. In related news, the U.S. attorney's office and the SEC have reportedly sent requests for information to investors and firms that work closely with FTX. The authorities have not yet made any charges, but appeared to be closely investigating the former exchange. And so now let's take a look at Asia because FTX Japan is hoping to restart withdrawals after its parent company, FTX approved a plan to return deposits. If this plan is successful, Japanese users of the collapsed crypto exchange could be among the first to get their money back. Withdrawals from FTX Japan were suspended on November 8th after local financial regulators ordered the exchange to halt services. Now three days later, FTX trading limited, the global enterprise founded by sbf filed for chapter 11 bankruptcy protection in the United States. And so they announced on its website that they have received approval from the management team at FTX trading to restart withdrawals. This, according to the notice, the exchange was able to confirm with its bankruptcy lawyers in the U.S. that the Japanese customers funds quote should not be part of the FTX Japan's estate given how these assets are held and property interests under Japanese law. Now this exchange has been working on the plant to restart withdrawals for the last two weeks. Now apparently they have already begun work on the plan to restart withdrawals and its engineering teams are working to make this possible. Now the notice also states that the exchange will incorporate controls, security audits, reconciliations, and reviews to establish a robust and secure process for withdrawals. FTX Japan will also publish information about customer assets held in segregated wallets and trust accounts each Monday. The notice also says they exchange aims to provide additional information regarding the resumption of withdrawals for its users in the near future. Now from Japan, let's go to Thailand because we have some central banker news for you. Central Bank governors from around the world are currently in Thailand for a conference hosted by the bank of Thailand and the bank for international settlements. This conference is focused on the role of central banks in the face of evolving financial technology and a panel discussion on digitized money systems included discussions about the rise of digital assets and Central Bank digital currencies, as well as the risks associated with these technologies. Eddie U is the CEO of the Hong Kong monetary authority. And he discussed the innovations and benefits of blockchain technology, as well as the potential impact on central banks. He noted that in the long term, CDC's and stablecoins could offer a more efficient and cost effective way of conducting transactions, but stressed that there are risks associated with any new technology. You said that regulators should focus on off chain activities related to blockchain technology, such as regulating virtual asset exchanges rather than trying to mitigate on chain risks. He also revealed that the Hong Kong government is working on regulations for the stablecoin industry, that align with international consensus. We can start with regulating off chain activities like regulating virtual asset exchanges. Hong Kong will soon introduce not just AML aspect, but also investor protection. On the other hand, Chang Yang re, governor of the bank of Korea was less optimistic about the future of blockchain technology in the monetary sector. And so he cited the recent failures of Tara Luna and FTX quote I was more positive before, but after seeing the Tara Luna and now FTX issues, I don't know if we will see the real benefit of this new technology. At least for monetary policy. And from Thailand, it is a hop over to Singapore, because there are some developments in the three arrows capital saga. Teneo is the New York based liquidation firm appointed by a British Virgin Islands court to handle this bankruptcy. Well, they have seized $35.6 million from the bank accounts of three arrows capital. This marks the largest amount of money recovered since three arrows capital imploded in July, leaving behind $3.5 billion in debt. This seizure was made three months after ten year old received permission from Singapore's high court to begin investigating the firm's assets in the country. And so it wasn't a court hearing on Friday, liquidators reported that they had recovered $2.8 million from forced redemptions of investments, as well as an unspecified number of crypto and NFTs. The task of locating and preserving the remaining assets of three arrows so that they can be returned to investors has been made more difficult by the uncooperative behavior of the hedge funds founders, Kyle Davies and suzu, according to teneo. In fact, the liquidators have expressed frustration with the founders lack of cooperation, stating that they have only had limited communication with them in their lawyers. In a court hearing today, the liquidators pointed

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