Crypto Biz: SBF’s newest Excel spreadsheet reveals all

FTX’s debtors are applying “Herculean” effort to unearth the exchange’s remaining assets. Meanwhile, Sam Bankman-Fried claims FTX US is solvent.

Large enterprise businesses spend tons of money keeping track of their financial dealings — think accountants, financial analysts, consultants and enterprise-grade accounting software. Sam Bankman-Fried, meanwhile, used Microsoft Excel.

On Jan. 17, in another sloppy Excel spreadsheet, SBF revealed that FTX US was solvent. The Excel file purportedly showed customer balances, bank deposits and assets held in cold storage. “S&C forgot to include bank balances” of roughly $428 million, SBF said, referring to FTX’s former legal counsel Sullivan & Cromwell. “Once you add those back in, you get in the neighborhood of my prior balance sheet” of around $350 million, he said.

This week’s Crypto Biz explores the “Herculean investigative effort” to identify billions in liquid FTX assets. We also give you the latest on the ongoing Digital Currency Group saga.

FTX: It took ‘Herculean investigative effort’ to identify $5.5B in liquid assets

SBF wasn’t the only one seeking to unearth FTX’s remaining balances. The bankrupt exchange’s debtors have identified $5.5 billion in liquid assets, including $1.7 billion in cash, $3.5 billion in crypto assets and around $300 million in securities. “We are making important progress in our efforts to maximize recoveries, and it has taken a Herculean investigative effort from our team to uncover this preliminary information,” said FTX CEO John Ray. Before you get too excited, know there is still a “substantial shortfall of digital assets,” according to FTX’s debtors. This means FTX users shouldn’t expect to be made whole anytime soon.

Sharing the FTX Debtors’ press release just issued: https://t.co/fcSs36nFmq

— FTX (@FTX_Official) January 17, 2023

Silvergate reports $1B net loss in the fourth quarter of 2022

The fallout from crypto winter continues to reverberate across the industry, with digital asset bank Silvergate reporting a massive $1 billion net loss in the fourth quarter. In a report published by the United States Securities and Exchange Commission, Silvergate disclosed $7.3 billion of customer deposits in Q4, down from roughly $12 billion in the third quarter. After getting wind of the news, credit rating agency Moody’s Investors Service downgraded Silvergate’s rating from Baa2 to Ba1. That’s junk status for those of you keeping track. It’s all starting to make sense why Silvergate laid off 40% of its staff in early January.

Despite the recently reported 70% drawdown in digital asset client deposits at Silvergate, NYDIG remains supportive of their business, adding deposits and continuing to utilized their SEN product.

— NYDIG (@NYDIG) January 18, 2023

Digital Currency Group halts dividends in an effort to preserve liquidity

The bad news surrounding Digital Currency Group, or DCG, continues to mount after the capital market company informed investors it would halt quarterly dividend payments indefinitely. It’s no secret that DCG is facing liquidity constraints tied to its Genesis Global Trading subsidiary. The issues surrounding Genesis have been dragged out in public by Gemini co-founder Cameron Winklevoss, who penned a letter to DCG’s board accusing the company of orchestrating “a carefully crafted campaign of lies” to hide the massive hole in Genesis’ balance sheet. At last check, it was estimated that DCG owed its creditors over $3 billion.

Hong Kong investment fund raises $500M to push mass adoption in Web3

Month after month of “down only” in crypto markets has left many of us jaded about the industry’s future. But behind the scenes, venture capital continues to pour millions into promising crypto-focused use cases. This week, Hong Kong investment manager HashKey Capital announced a $500 million fund to support the future of Web3 adoption. The new FinTech Investment Fund III will invest primarily in projects at the intersection of blockchain infrastructure, toolings and applications that can harness Web3 technology. “Web3 is growing too fast to be ignored,” HashKey investment director Xiao Xiao told Cointelegraph. “Many traditional institutions and internet giants are interested in crypto. Some are learning how to participate in this paradigm shift.”

Before you go: Is Bitcoin in a bull run or bull trap?

Bitcoin’s (BTC) price shot up more than 25% over the past week, marking its biggest seven-day rally in nearly two years. Naturally, investors are asking whether the bear market is over. Although there’s a decent chance that Bitcoin has bottomed, I wouldn’t get too excited about a prolonged bull rally just yet. In this week’s Market Report, I sat down with fellow analysts Marcel Pechman and Joe Hall to discuss BTC’s short and medium-term outlook. You can watch the full replay below.