BlockFi declares in court documents that FTX is the antithesis of what it does

Bloomberg via Getty Images
Bloomberg via Getty Images
Bloomberg via Getty Images

Nov. 29 (Reuters) – BlockFi, the first direct victim of the demise of cryptocurrency exchange FTX, told a bankruptcy judge in the United States on Tuesday that it was “the antithesis of FTX” and would work to restore customer assets as soon as possible. 

On Monday, BlockFi filed for Chapter 11 protection, blaming the collapse of FTX and the volatility in the cryptocurrency markets. Early in November, BlockFi stopped allowing withdrawals from their system because of worries about FTX’s reliability. 

Joshua Sussberg, an attorney for BlockFi, fought hard to differentiate his client from FTX at the company’s initial bankruptcy hearing in Trenton, New Jersey. Sussberg explained the complicated economic connections between the two companies but clarified that BlockFi did not share the issues that beset FTX, which abruptly collapsed earlier this month, creating worries of contagion through the whole industry. 

BlockFi, on the other end, had mature and consistent leadership, employed the right experts, and followed the proper procedures and protocols, so according to Sussberg. In contrast, FTX’s bankruptcy filings revealed missing assets and a total failure of corporate controls. 

Sussberg told U.S. that BlockFi was “shocked and saddened” to learn of FTX’s poor management. Judge Michael Kaplan in bankruptcy. 

Sussberg outlined how BlockFi and FTX were intertwined while giving Kaplan a history of the company. 

Before the crypto crisis in May, BlockFi had lent $680 million to the hedge fund Alameda Research, which is associated with FTX. 

By Dietrich Knauth 

Bitcoin briefly tops $40,000 for first time since June as cryptocurrency rallies after sell-off


Article originally posted on CNBC by Arjun Kharpal MON, JUL 26 2021 12:06 AM EDT / MST- Source:


Bitcoin surged above $40,000 for the first time in nearly six weeks on Monday as sentiment turned bullish following a recent sell-off.

The cryptocurrency traded above the key level briefly, reaching $40,245 by 3:30 p.m. ET, according to Coin Metrics data. Bitcoin last traded above the $40,000 level on June 16.

Bitcoin’s price retreated later Monday after Amazon denied City A.M.’s report that the retail giant would start accepting bitcoin for payments this year.

Amazon on Friday confirmed it is looking to add a digital currency and blockchain expert to its payments team, suggesting it could be taking a closer look at bitcoin and other cryptocurrencies.

“Notwithstanding our interest in the space, the speculation that has ensued around our specific plans for cryptocurrencies is not true. We remain focused on exploring what this could look like for customers shopping on Amazon,” an Amazon spokesperson said in a statement to CNBC.

Bitcoin traded at about $38,024, or about 10.4% higher, by 4:45 p.m. ET .

The moves in the cryptocurrency’s price comes after bitcoin recently fell below $30,000 after a global sell-off in stocks, sparking fears that it could plunge even further.

Musk, Dorsey, Wood in focus

Twitter CEO Jack Dorsey, Tesla CEO Elon Musk and ARK Invest CEO Cathie Wood all recently spoke during a closely watched bitcoin conference called “The B-Word.”

Musk said that Tesla would likely start accepting bitcoin for vehicle purchases again as a greater share of bitcoin mining switches to renewable energy. In May, Tesla suspended vehicle purchases using the cryptocurrency out of concern over the “rapidly increasing use of fossil fuels for bitcoin mining.”

Bitcoin mining is the energy-intensive process of creating new coins, which involves solving complex math problems. The computational power required to do so also consumes a lot of energy.

“The Chinese trading day has opened up, and the Elon/Jack/Cathie talk was super bullish,” said Alex Brammer of Luxor Mining, a cryptocurrency pool built for advanced miners.

These bullish moves have also contributed to a so-called “short squeeze,” according to bitcoin mining engineer Brandon Arvanaghi.

Investors who short bitcoin are betting that the price will fall further. But if the price goes higher, these investors look to cut losses and exit their short positions, which helps to push the price even higher.

“I think the extent of the jump was probably driven by over-leverage shorts,” Vijay Ayyar, head of business development at cryptocurrency exchange Luno, said.

Meanwhile, some of the issues that have weighed on bitcoin’s price have begun to clear up. Over the past few months, China has renewed its crackdown on cryptocurrencies targeting mining and trading. And concerns over the carbon footprint of bitcoin mining are starting to wane.

Luxor Mining’s Brammer said the uncertainty around the environmental impact of mining and the Chinese regulatory concerns have “worn off.”


What’s Happening with Bitcoin Mining in China?

Bitcoin Miners in United States Warehouse

In late May, the Chinese government cracked down on crypto mining sending markets into a crash over the past month. The crackdown follows a series of policy announcements aimed at curbing crypto mining operations due to environmental concerns. However, the recent clampdown is nothing new but merely a reiteration of regulations proposed years ago. The Chinese central bank has been concerned with cryptocurrency’s growing popularity because it directly challenges the nation’s current financial stability. To protect the economy from the wild volatility of the crypto market, Beijing halted the facilitation of crypto payments from leading financial institutions in the country and doubled down on bitcoin mining regulations as well. This has set off what many are calling “the great mining migration.” The crypto mining exodus has already begun with new and used cryptocurreny miners flooding the market, and many believe the rigs will be relocated to North America. 

This is an end to an era for China, which has hosted 65% – 75% of the world’s hash rate. Due to its established technology, supply chain, and cheap electricity, parts of the country were ideal for large scale mining operations. Regions like inner Mongolia, Xinjiang, Sichuan, and parts of Yunnan were major hubs for mining rigs. Since the crackdown, province leaders have provided two months for miners to clear out. In addition, cryptocurrency prices have plummeted. Earlier in the year, Bitcoin peaked at $64k and is now sitting just under $36k. Though there are several variables responsible for the heavy decline, it would be difficult to deny China’s giant impact on the market. Despite China’s anchored stance on crypto, miners are looking to relocate to the United States and Canada. Texas is now a potential location for the miners in exodus from China because of its libertarian regulatory environment and abundant cheap green energy. In addition, Texas has the cheapest electricity in the United States. The exodus stresses the opportunity for miners to diversify their global hashrate. This migration provides the bridge for other countries to implement small crypto zones and further expose people to digital assets.  

Since the inception of the Bitcoin, studies have shown that there has been an astronomical surge in carbon emissions. This undermines President Xi Jinping’s promise to make China carbon neutral by 2060. Thanks to the heavy rain during China’s summer season, miners were able to rely on sustainable power sources to fuel the rigs. However, the arid winters caused miners to seek out an alternative cheap electricity source: coal. Burning coal to create currency has quickly become a huge factor for the mining exodus. In addition, many believe that the Chinese Communist Party is speculative and apprehensive toward anything outside of their control. The crackdown was a result of these factors. Now, some of the world’s largest mining farms are halting operations in China and migrating across the globe to set up shop in other countries.