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Crypto SWOT: Advisers overseeing the bankruptcy of FTX are struggling to locate the company's cash and crypto

Kitco Media
By Frank E Holmes
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Strengths

  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Trust Wallet Token, rising 93.04%.

  • The World Cup has an official crypto exchange sponsor - Crypto.com – and it's just one of several decentralized tie-ins for the World Cup, which kicks off in Qatar in the coming week. In September, FIFA launched its own NFT platform on the Algorand blockchain platform, and it's coming to the World Cup too, writes Bloomberg.

  • There can be little doubt that crypto investors expect more firms to blow up in the treacherous wreckage of the wipeout at FTX. Their puzzling response, however, has been to drive up Bitcoin this week. The token is up 3% over the period, topping global stocks while a gauge of the leading 100 virtual coins added about 1%, writes Bloomberg.

Weaknesses

  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was Casper, down 20.04%.

  • Bitcoin dropped after the crypto brokerage Genesis and its partner in a lending business, Gemini Trust Co, were the latest industry firms to detail the fallout from the spreading contagion after the collapse of the FTX exchange. The token dropped as much as 3.1%, erasing a small gain from earlier in the session Wednesday, writes Bloomberg.

  • Coinbase CEO Brian Armstrong sold more than 30,000 Class A Coinbase shares for $1.6 million on November 11, according to a filing with the SEC. Coinbase shares were trading over $340 when the company first went public in April 2021. They closed today at $55.53 as crypto prices have shed their value over the past year, writes Bloomberg.

Opportunities

  • Ark Investment Management snapped up more than 315,000 shares, worth roughly $2.8 million, of the beleaguered crypto fund on Monday for the ARK Next Generation Internet ETF (ARKW). Bloomberg data shows the firm's first purchase of the Grayscale product since July 2021, according to website Ark Invest Daily trades, which tracks the firm's portfolio moves.  

  • Man Group is close to starting a dedicated cryptocurrency hedge fund, delving deeper into a market that's reading from the collapse of exchange operator FTX. The world's largest publicly traded hedge fund firm has been developing the strategy, led by money manager Andre Rzym, for months, writes Bloomberg.  

  • A CFTC commissioner has urged crypto industry whistleblowers to come forward in the aftermath of FTX Group's implosion, saying tipsters have previously received millions of dollars for their help. CFTC said on Thursday that informants would get anonymity, adding that such tips play a crucial role in enforcement given the opaqueness of some of the crypto world, writes Bloomberg.  

Threats

  • Temasek International invested $200 million to $300 million in FTX before its implosion and is preparing to write down the entire bet. Michael Novogratz, the billionaire founder of Galaxy Digital Holdings, said the crypto crisis could get worse as the industry braces for more contagion from the fall of Sam Bankman-Fried's FTX empire, writes Bloomberg.

  • Crypto brokerage Genesis is suspending redemption at its lending business after facing what it describes as "abnormal withdrawal request" in the aftermath of the collapse of FTX. Genesis' lenders include Gemini Trust Co., the cryptocurrency platform run by the Winklevoss brothers. Gemini said it has paused withdrawals on its lending program, writes Bloomberg.  

  • Advisers overseeing the bankruptcy of FTX Group are struggling to locate the company's cash and crypto, citing poor internal controls and record keeping. The complete failure of corporate controls at the company is "unprecedented" according to new CEO John J. Ray III, who has a more than 40-year career in restructuring, including overseeing the liquidation of Enron, writes Bloomberg.
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Frank E Holmes

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., a boutique investment advisory firm based in San Antonio that manages domestic and offshore funds specializing in the natural resources and emerging markets sectors. The company’s no-load mutual funds include the Global Resources Fund (ticker PSPFX), the World Precious Minerals Fund (UNWPX) and the Gold Shares Fund (USERX).

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