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Prosecutors seize SBF’s $50M deposit to small bank

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Prosecutors seize SBF’s $50M deposit to small bank

Prosecutors seize SBF’s $50M deposit to small bank Zeynep Geylan · 7 hours ago · 1 min read

Roughly $50 million of SBF’s deposit has been seized by prosecutors – Alameda invested $11.5 million earlier in the same bank.

1 min read

Updated: January 25, 2023 at 5:14 pm

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Cover art/illustration via CryptoSlate

Prosecutors seized just under $50 million belonging to FTX founder Sam Bankman-Fried (SBF) held in Farmington State Bank on Jan. 4, according to a Yahoo Finance (YF) report on Jan. 24.

The total amount seized was only $500 short of $50 million, according to the YF report. The bank specialized in agricultural loans to farmers and had only three employees when SBF deposited this amount. It also didn’t offer online banking services or credit cards and had a net worth of $5.7 million.

Alameda invests in Farmington

SBF’s venture capital Alameda Research invested $11.5 million in the bank in March 2022, according to a New York Times (NYT) report published in November 2022,

Farmington has been steadily collecting about $10 million in deposits for a decade — by the third quarter of 2022, this amount increased to $84 million, according to the NYT report. Of this increase, $71 million came from new accounts.

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The bank also changed its name to Moonstone Bank and started offering online banking services after FTX’s investment, according to the NYT report.

The former head of the Independent Community Bankers of America, Camden Fine, reportedly shared his thoughts about the investment, according to the NYT report. He said:

“The fact that an offshore hedge fund that was basically a crypto firm was buying a stake in a tiny bank for multiples of its stated book value should have raised massive red flags for the F.D.I.C., state regulators and the Federal Reserve. It’s just astonishing that all of this got approved.”

Recent FTX Stories

Bear Market

2019 Bitcoin investors back in profit above $21.8k

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2019 Bitcoin investors back in profit above $21.8k

2019 Bitcoin investors back in profit above $21.8k Liam ‘Akiba’ Wright · 8 hours ago · 1 min read

Bitcoin holders in profit on average as the price continues to rally

1 min read

Updated: January 29, 2023 at 10:48 pm

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Cover art/illustration via CryptoSlate

Investors who purchased Bitcoin in 2019 are back in profit, according to data analyzed by Glassnode and CryptoSlate. The average acquisition price can be derived by tracking exchange data and aligning the price of Bitcoin with the time of withdrawals.

The below chart illustrates the average acquisition price of Bitcoin since its inception.

Bitcoin average withdrawal price

Interestingly, the average historical price is not consistent across exchanges. The average price for all exchanges sits around $16.7k, while Coinbase and Binance are around $21k. With Bitcoin’s price well above $23.5k, all exchanges are, on average, in profit. The broader market may welcome such data as it indicates market stress has been reduced.

Bitcoin exchange average price

Notably, Bitfinex investors have a considerably lower average withdrawal price of around $11,000. Given that Bitcoin has been above $11,000 since October 2020, such a low price makes it a considerable outlier.

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association

Crypto Association In Turkey Vows To Block Exchanges That ‘Victimize Traders’

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Crypto Association In Turkey Vows To Block Exchanges That ‘Victimize Traders’

A new organization has been established in Turkey with the aim to monitor and help develop the country’s crypto sector, local media reported. Its first task will be to address recent problems with some cryptocurrency exchanges and boost confidence in the industry as a whole.

New Entity to Deal With Issues in the Crypto Space in Turkey, Hopes to Increase Transparency

People trading cryptocurrencies in Turkey have been estimated at over 8 million as of 2022, according to Emrah Inanc, head of the Crypto Industry Development, Monitoring and Reporting Association. The country is in the world’s top five in terms of crypto investments, he highlighted.

Speaking to the Anadolu Agency, the top executive of the newly-founded organization also emphasized that transparency is crucial for the development of the crypto sector. That’s why it will first focus efforts on solving problems with crypto exchanges and improve confidence in the industry.

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Inanc pointed out that a number of exchanges from the Far East have been trying to attract Turkish customers. On this backdrop, he noted that the lack of rules and regulatory authority has led to “inconvenient results,” and acknowledged some of the challenges in relations with the public sector:

We are faced with allegations that some exchanges have blocked customer accounts illegally for financing terrorism and money laundering.

Emrah Inanc also indicated that the association is ready to periodically and transparently share information about the shortcomings it’s identifying with all relevant institutions. He also warned traders about dealings with offshore exchange platforms.

“In order to prevent these illegal practices and irregularities, we will take the necessary steps to block cryptocurrency exchanges … that cause unlawful transactions, cause victimization, and threaten our citizens and the country’s economy,” Inanc elaborated. He also urged both individuals and organizations to send requests, suggestions, and complaints to the group by filling out a form posted on its website.

With the popularity of cryptocurrencies growing amid high inflation, Turkey has become an attractive market for crypto exchanges in the past few years. Turkish traders were also affected by a few failures in the sector, including that of FTX which filed for bankruptcy in mid-November. Turkey’s financial watchdog launched a probe into the collapse of the major exchange as it had a Turkish platform.

Several domestic exchanges have also shut down, such as Thodex, whose founders and top executives were accused of committing fraud and money laundering as part of a suspected exit scam. Vebitcoin was investigated when it ceased activities after the country’s central bank banned crypto payments, and Coinzo closed down as well.

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Tags in this story

association, Crypto, crypto association, crypto exchanges, crypto industry, Crypto investors, crypto market, crypto sector, crypto traders, Cryptocurrencies, Cryptocurrency, Exchange, Monitoring, Regulations, Turkey, Turkish

Do you think the new crypto association will help the development of the crypto industry in Turkey? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Analysis

Binance is still operating normally despite months of FUD

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Binance is still operating normally despite months of FUD

Binance is still operating normally despite months of FUD Anthony Clarke · 33 seconds ago · 3 min read

Despite the market fluctuations in late 2022, Binance has maintained its steady operation, ensuring smooth trading experiences for its users.

3 min read

Updated: January 27, 2023 at 10:16 pm

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Cover art/illustration via CryptoSlate

Toward the end of 2022, the market saw some FUD (fear, uncertainty, and doubt) surrounding the safety and security of Binance, one of the world’s largest and most popular cryptocurrency exchanges.

The concerns stemmed from various sources, including social media posts and online articles, that have raised concerns about the exchange’s security and the possibility of user funds being at risk.

Let’s take a closer look at these recent concerns, examine the audit reports that have been released, and explain why the FUD should not be a cause for concern and why Binance is safe.

Summary of the Concerns

One of the concerns surrounding Binance has been a series of social media posts and online articles that have claimed that the exchange is not secure and that user funds are at risk.

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These claims have been fueled by various factors, including the Celcius bankruptcy, the high-profile collapse of FTX, temporary withdrawal pauses, and the recent proliferation of phishing attacks targeting cryptocurrency exchanges.

Despite these concerns, it’s important to note that Binance has a long track record of security and has taken numerous steps to ensure the safety of its users’ funds. For example, the exchange stores most of its users’ funds in offline cold storage wallets that are not connected to the internet and much less vulnerable to hacking attacks.

In addition, Binance has implemented several other security measures, including multi-factor authentication, to protect users’ funds. We’ll look at some of the concerns in greater detail below.

Proof-of-Reserves

Following the downfall of multiple platforms in 2022, the public became more interested in seeing exchanges’ proof-of-reserves to determine if they have the 1:1 backing of the assets listed. In December 2022, Binance was audited by the financial auditor Mazars, and the report showed that Binance’s Bitcoin (BTC) reserves exceeded over 100%.

However, there were still some concerns since the platform’s liabilities were not included. Former Kraken CEO Jesse Powell criticized the audit in November, claiming that the audit wasn’t enough without covering the negative balances. Binance CEO Chenpang Zhao (CZ) later confirmed that the exchange had no outstanding loans in December 2022.

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Pausing USDC withdrawals

On December 13th, 2022, Binance temporarily stopped withdrawing USD Coin (USDC) tokens on the platform. This move caused investors to grow concerned since Celcius halted withdrawals shortly before its bankruptcy in July 2022. In addition, BlockFi also halted withdrawals before its collapse, with bankruptcy hearings proceeding in early January 2023.

However, withdrawals were halted on Binance due to a token swap involving USDC, according to an announcement on Twitter.

Source: @binance on Twitter.com

In this case, it seems a matter of bad timing, primarily due to the fall of the popular FTX platform a month earlier. Additionally, withdrawals for the Tether (USDT) and Binance Coin (BNB) stablecoins were not limited during this time. Binance was also able to survive a massive surge in withdrawals by users.

On the same day that USDC withdrawals were paused, up to $2 billion in Ethereum tokens were withdrawn from the platform within 24 hours. Chenpang Zhao (CZ) even welcomed the large withdrawals, saying he thought it was

“a good idea to stress test withdrawals on each CEX on a rotating basis.”

Source: @cz_binance on Twitter.com

The crypto exchange continued to weather a large number of withdrawals, and recently, Binance has seen up to $12 billion in withdrawals within the past two months. Despite the heavy withdrawals, Binance has continued to operate as usual.

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Phishing

Another source of FUD surrounding Binance has been the proliferation of phishing attacks targeting all top exchanges. Phishing attacks are a standard tactic hackers use to trick people into giving away their login credentials or other sensitive information by pretending to be a legitimate company or individual.

In the case of Binance, there have been some instances where hackers have set up fake apps, websites, or social media accounts purporting to be affiliated with the exchange and have used these to trick users into giving away their login credentials.

While it’s true that phishing attacks can be a severe risk for any online service, it’s important to note that Binance has taken several steps to protect its users from such attacks.

For example, the exchange has implemented email and SMS verification for login attempts, set up a dedicated security team to monitor phishing attacks, and published several warnings and guidelines to help users protect themselves.

In closing

While there have been some recent concerns surrounding the safety and security of Binance, it’s important to note that the exchange has continued to operate as normal without any issues.

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