The 3 biggest crypto stories to look for this coming week

Liquidity issues and bankruptcy remain the biggest stories of this forthcoming week as failed crypto businesses and the remaining ones still standing deal with their various problems.

The week will be important for the leaders and former leaders of three crypto exchanges: FTX, Binance and Gemini.

Will the US get Sam Bankman-Fried?

After former FTX CEO Sam Bankman-Fried was arrested in the Bahamas last week, he was sent to Fox Hill prison, where he was denied bail.

On Monday, Bankman-Fried is expected to tell a court in the Bahamas that he will no longer contest extradition to the United States, Reuters reported, citing an unidentified source. In the U.S., he will be facing criminal fraud charges.

If convicted of all the charges of which he is accused, the former CEO could face up to 115 years in prison.

Will Binance sidestep a bank run?

While Binance CEO Changpeng Zhao maintains that Binance’s financials are strong and the exchange has $56 billion in crypto under its control, the exchange is still seeing a high rate of withdrawals from the platform. Binance saw $6 billion of withdrawals in the first half of last week, according to the Financial Times, which was given the data from the exchange.

So far, this pressure on withdrawals has caused some logistical issues for the exchange. It initially had troubles supporting stablecoin withdrawals as it was stuck waiting on the legacy banking system. Beyond that, the exchange appears to be processing withdrawals normally.

At the same time, auditing firm Mazars has dropped Binance and all other crypto companies. This was because of the way its reports were being perceived, likely appearing to show greater checks than they really were. In fact, a source at the company told the FT that the auditor had “not looked that much” into the financial positions of these exchanges.

The thing to watch will be whether Binance’s customers show faith in the exchange and its reserves or if withdrawals keep ramping up.

Watching over Genesis

Another big story to watch for will be how Genesis deals with its liquidity issues. Crypto exchange Gemini, which has funds stuck with Genesis as part of its Gemini Earn program, has set up a creditors committee. Houlihan Lokey, who was appointed financial adviser of the committee, has begun advocating for a plan to resolve the issues at Genesis, according to its latest update. 

In the meantime, there is still plenty of speculation over the combined health of Genesis and its parent company Digital Currency Group (DCG). Many tokens related to DCG were hit particularly hard last week, leading to widespread concern among crypto traders. 

At the same time, the discount for the Grayscale Bitcoin Trust (GBTC) — another DCG company — dropped to 48%. This poses further headaches for the parent company, which bought up tranches of GBTC using its own balance sheet.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.