Welcome back to Chain Reaction.
Happy December! Just one more month until we reach 2023 and start it all over again (or something like that). Time flies when you’re reading crypto news, am I right? Feels like every day something is going down in the crypto world and this week continued to prove that.
On Wednesday, FTX’s former CEO Sam Bankman-Fried spoke at The New York Times’ annual DealBook summit in an interview with Andrew Ross Sorkin. SBF said FTX failed on risk management and he didn’t “knowingly co-mingle funds.” Hmm. I was out of the office moving to a new apartment, but I’m catching up with my amazing colleagues’ coverage of SBF’s claims, which you can read about here, here and here.
Speaking of FTX, the contagion is continuing to spread in the crypto markets as the latest domino to fall was BlockFi, which filed for Chapter 11 bankruptcy on Monday. In July, FTX signed a deal with the option to buy BlockFi for up to $240 million, the CEO of BlockFi Zac Prince tweeted. Since then, things have tumbled, as FTX collapsed and also filed for Chapter 11 bankruptcy, weeks before BlockFi. With that said, “the company expects that recoveries from FTX will be delayed.”
This news follows a number of crypto-focused companies, like Voyager and Celsius, which are also currently going through bankruptcy proceedings.
Whether or not there’s more contagion to come is the question everyone seems to have. While I don’t have a crystal ball to predict the future, I’m pretty sure that this won’t be the last company to squawk post-FTX.
Last week, we shared an episode of a conversation with Binance’s top dog, aka CEO Changpeng “CZ” Zhao. This week, for the Tuesday episode, we released a recording of our discussion live onstage with Alchemy’s CEO Nikil Viswanathan at TechCrunch Sessions: Crypto 2022.
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this week in web3
Here are some of the biggest crypto stories TechCrunch has covered this week.
SBF claims massive ignorance on obvious conflicts in FTX downfall
As mentioned above, Sam Bankman-Fried (SBF), the founder and former CEO of the fallen FTX, spoke at The New York Times’ annual DealBook summit in an interview with Andrew Ross Sorkin. SBF said that he didn’t “knowingly co-mingle funds” between Alameda and FTX. “Given the size of the position, I think it was not our intention, it was, in effect, tied together substantially more than I would have ever wanted to be,” he said.
BlockFi files for Chapter 11 bankruptcy
This past year has been hectic for the crypto lending platform BlockFi, and today is no different as the company shared an announcement that it filed for voluntary Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of New Jersey.
Binance launches proof-of-reserves system for BTC holdings
Cryptocurrency exchange company Binance has released a new site that explains its proof-of-reserves system. The company is starting with BTC reserves. Right now, Binance has a reserve ratio of 101%. It means that the company has enough bitcoins to cover all users’ balances. This move comes a couple of weeks after the collapse of FTX, another popular crypto exchange.
Lawyers see crypto regulation coming in 2023 because industry needs to rebuild trust (TC+)
Despite an uneven year in the crypto markets, many market participants are unperturbed about the long-term health of the sector and say that legal frameworks in 2023 could restore trust in the industry. “Crypto will recover,” Katherine Dowling, general counsel member at Bitwise Asset Management, said to TechCrunch. “This is not the death of crypto.”
As BlockFi files for bankruptcy, how contagious will FTX’s downfall become? (TC+)
Crypto lending platform BlockFi filed for Chapter 11 bankruptcy on Monday, just a few weeks after once-major crypto exchange FTX did the same. While BlockFi has been struggling to stay afloat for months now (and was even potentially going to be acquired by FTX), this latest filing signals that the bankruptcy contagion may run deeper than what the crypto industry sees at the surface.
the latest pod
In Chain Reaction’s Tuesday episode Alchemy’s CEO Nikil Viswanathan had a lot to say about how the industry and developers’ focus on infrastructure has shifted, what will drive the next wave of consumer interest and which blockchains he’s seeing the most developer activity on.
He also shared, for the first time ever, why his startup Alchemy is named after a medieval form of chemistry (disclaimer: it has nothing to do with science).
As a friendly reminder, this was Chain Reaction’s last episode for this season and we’ll be taking a break for the month of December, but catch up with us in the New Year where I’m confident there will be a lot to talk about!
Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to keep up with the latest episodes, and please leave us a review if you like what you hear!
follow the money
- Web3 developer platform Fleek raises $25 million led by Polychain Capital
- Cameroonian crypto and savings platform Ejara raises $8 million, led by Anthemis and Dragonfly
- Ethereum staking-focused startup Kiln raises $17.7 million
- Crypto market maker Keyrock closes $72 million Series B
- Web3 gaming platform Burn Ghost raises $3.1 million to reward NFT prizes to players
This list was compiled with information from Messari as well as TechCrunch’s own reporting.