Fears of Contagion Darken the Crypto Sector Outlook

(Bloomberg) — The crypto industry braced for more contagion from the fall of Sam Bankman-Fried’s FTX empire. The US and The Bahamas are talking about bringing him to America for questioning, people familiar with the matter said.

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Bankman-Fried took to Twitter on Wednesday, telling his followers that “there was too much leverage — more than I realized” in his business. That came a few hours after he posted that FTX US had enough money to repay customers.

The fallout from the crisis is threatening the future of crypto lenders like BlockFi Inc. and Voyager Digital Ltd. Digital-asset markets were steady in a break from recent turmoil, with Bitcoin hovering around $17,000.

Key stories and developments:

FTX Wrangles More Than a Million Creditors Amid Chaotic Collapse
FTX Once Had Wall Street Heavyweights Sold on Derivatives Plan
FTX’s Crypto Contagion Infects Firms From BlockFi to Voyager

(Time references are New York unless otherwise stated.)

About 75% of Retail Buyers of Bitcoin Lost Money, BIS Study Says (2:20 p.m. HK)

A study of how retail investors use cryptocurrency exchange apps suggests about three-quarters have lost money on Bitcoin, according to the Bank for International Settlements.

Data spanning 95 countries from 2015 to 2022 indicates the vast majority of app downloads occurred when Bitcoin’s price was above $20,000, the working paper from the Basel, Switzerland-based BIS says.

The world’s largest token has plunged over 70% from a record hit about a year ago, pressured by rapidly tightening monetary policy and a series of huge blowups at crypto outfits, most recently FTX.

FTX Digital Markets Files for Chapter 15 in New York (noon HK)

Bahamas-based FTX Digital Markets Ltd. has submitted a Chapter 15 petition for recognition of a foreign proceeding in the Southern District of New York, according to a filing on the court’s website.

It’s a subsidiary of FTX Trading Ltd., which filed for Chapter 11 bankruptcy on Nov. 11.

Singapore Says It Remains Focused on Productive Blockchain Uses (9:30 a.m. HK)

Asked at a conference about whether the FTX imbroglio changes the Monetary Authority of Singapore’s approach to crypto, its chief fintech officer Sopnendu Mohanty said “we stay on the course, we stay on the business-case driven approach to the space.”

The central bank is “willing to innovate” provided risks are under control, he added. Singapore, which is clamping down on retail-investor speculation in crypto, has previously said it is seeking to become a hub for productive uses of blockchain technology.

FTX Australia’s License Is Suspended (4:05 p.m.)

Australian Securities and Investments Commission has suspended the Australian financial services license of FTX Australia until May 15, 2023 after it was placed into voluntary administration on Nov. 11, the regulator says in a statement.

Regulators Discuss Bringing SBF to US (3:19 p.m.)

US and Bahamian authorities have been discussing the possibility of bringing Bankman-Fried to America for questioning, according to three people familiar with the matter.

The conversations between law-enforcement officials in the two countries have intensified in recent days as they probe his role in the implosion of cryptocurrency firm FTX. Bankman-Fried has been cooperating with Bahamian authorities, said one of the people, who like the others asked not to be identified due to the sensitivity of the matter.

SBF Meeting With Regulators (2:58 p.m.)

Bankman Fried said he is meeting “in-person with regulators” to “do right by customers,” according to a tweet.

Tweet Says FTX Had Enough to Repay Customers (12:17 p.m.)

FTX US had enough to repay all if its customers “as of post-11/7,” Bankman-Fried said in a tweet. But he acknowledged that “not everyone necessarily agrees with this.”

Crypto Lender Voyager Deal Void (11:48 a.m.)

Bankrupt crypto lender Voyager Digital Ltd. doesn’t plan to sell itself to FTX after the crypto exchange itself was forced into insolvency proceedings, according to a lawyer for Voyager.

FTX violated its contract to buy Voyager out of bankruptcy, according to Voyager’s main bankruptcy attorney Joshua Sussberg. FTX has agreed that Voyager can pursue other bids, but has not yet confirmed that the company is pulling out of the contract to buy the smaller crypto company, Sussberg said in court Tuesday.

PwC Named Liquidators (9:35 a.m.)

The Supreme Court of the Bahamas approved partners from PricewaterhouseCoopers, also known as PwC, as provisional liquidators to oversee the assets of crypto exchange FTX.

The Bahamas Securities Commission wrote in a statement that it “moved swiftly to use its regulatory powers” to further protect clients.

–With assistance from Amanda Fung, Sidhartha Shukla and Suvashree Ghosh.