Crypto pressed by regulators in 2023

Crypto The collapse of the cryptocurrency exchange platform FTX in November gave rise to what has been nicknamed the “Lehman moment” by many.

When one’s business expands to everyone, it is said to be having a Lehman moment.

It alludes to the 2008 collapse of Lehman Brothers, whose bankruptcy also created an issue for the entire world.

The crypto sector, meanwhile, may be considered to have experienced a contagion when FTX went bankrupt.

Public outcry was used to provide regulators who were reluctant to act on a more exact target and a more powerful reason.

Since then, the cryptocurrency industry seems to be following the Dodd-Frank Act’s guidelines, which may stop further risk-taking in an effort to avoid additional financial risks.

The market

Since the advent of cryptocurrencies, the sector has developed and grown into a trillion-dollar industry.

The market is being handled by an inexperienced regulatory infrastructure, and many people are wary of the idea that cryptocurrencies may replace traditional financial instruments in the future.

State and federal officials have stepped up their talk and attempts to control the growing business since the FTX bankruptcy.

Major crypto corporations, however, are not very pleased with the efforts.

The Senate Committee on Banking, Housing, and Urban Affairs convened a hearing on Tuesday to discuss the requirement for further financial protections.

Sherrod Brown, the committee’s chairman, opened the meeting by saying:

“While crypto contagion didn’t infect the broader financial system, we saw glimpses of the damage it could have done if crypto migrated into the banking system.”

“These crypto catastrophes have exposed what many of us already knew: digital assets – cryptocurrencies, stablecoins, and investment tokens – are speculative products run by reckless companies that put Amercians’ hard-earned money at risk.”


The hearing was called after Paxos, a cryptocurrency business, was told to stop minting a significant stablecoin by New York’s top financial regulator.

The demand just made the crypto space more restricted.

Digital currencies called stablecoins maintain a 1:1 backing from fiat money.

Paxos said on Monday that the New York State Department of Financial Services was instructed to cease producing BUSD, a stablecoin related to Binance.

The order, according to New York officials, is the result of unresolved difficulties with Paxos’ control of its partnership with the cryptocurrency exchange.

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The company said that they would stop issuing the stablecoin on February 21.

Customers will be able to redeem their stablecoin through February 2024, and BUSD circulation will be backed 1:1 by US dollar reserves.

They may also choose to redeem their money in US dollars or convert it to the Pax Dollar, a different stablecoin that the corporation issues.

The business also announced that it will end its partnership with Binance.


According to the Securities and Exchange Commission, BUSD should have been registered with the SEC in accordance with federal securities regulations, and the SEC intends to prosecute Paxos.

Paxos “categorically disagrees” with the notion, claiming that the BUSD is not a security under federal securities regulations, in a statement released on Monday.

The company claims that it is prepared to discuss the matter with the SEC and will “vigorously litigate” if required.

Investors have been alarmed by the BUSD directive.

2019 saw the alliance between Binance and Paxos for the stablecoin’s introduction.

The cryptocurrency trading platform had one of its worst days on Monday.

Data supplier Nansen reports that Binance had withdrawals totaling $873 million in net outflows.

Increasing enforcement

The BUSD crackdown is the latest development in numbers exhibiting their authority in the previous several months.

Its actions generate confusion and discontent inside the crypto ecosystem as many proponents have long sought regulatory clarification.

Marcus Sotiriou, a market analyst for GlobalBlock, paid close attention to what was happening.

“Regulation by enforcement is puzzling for crypto enthusiasts,” he pointed out.

“People are desperately trying to figure out how to offer a product legally whilst getting zero guidance.”

Whack-a-mole enforcement tactics have been used by the SEC in recent weeks, drawing criticism for unfairly concentrating the nascent business.

For instance, the SEC and the cryptocurrency exchange Kraken reached a $30 million settlement, which required the business to stop using staking.

Investors can earn a passive dividend on their cryptocurrency assets by doing away with the staking method.

The resolution brought up issues with concurrent exchanges using staking services.

Staking is seen as crucial to ensure the stable intersection of several coins by cryptocurrency enthusiasts.

Regulators cautioned US banks earlier in January about a number of hazards the cryptocurrency market carries, including:

  • Fraud
  • Shoddy risk management
  • Volatility

“It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system,” said the regulators.

FTX recover over $50 billion lost funds in latest hearing

FTX: On the FTX crypto exchange platform, futures trading was supported for a range of digital assets, including Bitcoin, Ethereum, and Litecoin.

The trading platform granted access to other investment products, including leveraged tokens and options.

Professional traders and institutional investors valued FTX because of its strong liquidity and quick execution times.

The platform failed to recover after plummeting in the latter half of last year.

However, the business recovered some of its liquid assets following the November collapse.

The news

On Wednesday, FTX recovered a total of $5 billion in cash, liquid assets, cryptocurrencies, and securities investments.

According to a lawyer for the company, it is still unclear how much money was lost.

With a $32 billion market value, FTX filed for Chapter 11 bankruptcy protection in November 2022.

Sam Bankman-Fried, the company’s creator, was accused of organizing an “epic” fraud that, when it crumbled, plundered billions of dollars from clients, investors, and lenders.


According to the company’s lawyer Andy Dietderich, several assets were retrieved at the hearing on Wednesday.

“We have located over $5 billion of cash, liquid cryptocurrencies, and liquid securities,” Dietderich told US bankruptcy Judge John Dorsey.

According to Dietderich, the company plans to sell non-strategic investments for $4.6 billion in book value.

The legal team is still attempting to generate enough internal data, according to the attorney, who also noted that the precise size of the customer deficiency is still unknown.

The US Commodities Futures Trading Commission estimates that the amount of lost money is likely greater than $8 billion.

The $5 billion in assets recovered, according to Andy Dietderich, did not include those taken by the Securities Commission of the Bahamas, where SBF resided and FTX was based.

The confiscated assets were valued at $170 million by the FTX attorney as opposed to the Bahamian authorities’ estimate of $3.5 billion.

The company’s FTT token, which is highly volatile and hardly traded, made up the assets.

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Affiliates sales

FTX may raise additional cash in the coming months to help customers after Dorsey granted their request\ to evaluate affiliates’ sales at the hearing on Wednesday.

Affiliates of the FTX group are separate legal entities with independent management and client accounts.

They include the following:

  • Embed
  • FTX Europe
  • FTX Japan
  • LedgerX

Although it had received unsolicited business bids, FTX emphasized that it had no plans to sell to any organizations.

Therefore, they intend to hold bids in February 2023.

Opposition and approval

The US Trustee Program of the federal government resisted selling the affiliates before the scope of the FTX fraud was comprehended.

FTX requested Dorsey’s permission to keep the 9 million FTX client identities a secret to maintain the company’s worth.

The company maintained that user privacy was crucial to preventing clients from being stolen by competitors.

It also respects privacy rules and prevents identity theft.

Although the business requested that the names be kept a secret for six months, Dorsey only consented to three.

He stated why he made this decision:

“The difficulty here is that I don’t know who’s a customer and who’s not.”

John Dorsey scheduled a hearing on January 20 to discuss how the company can distinguish its clients.

He said he wanted the company to return in three months to offer further details indicating the possibility of identity theft if the identities are made public.

In response, media businesses and the US Trustee Program asserted that creditor information exchange is required by US bankruptcy law to encourage fairness and transparency.

Other notes

The firm will sell its affiliates and end a 19-year, $135 million sponsorship agreement with the Miami Heat, according to a lawyer for the company.

A seven-year deal for over $89 million with the popular game League of Legends will also come to an end.


Sam Bankman-Fried was found guilty last month in federal court in Manhattan on two charges of wire fraud and six counts of conspiracy.

He is accused of defrauding client funds to satisfy financial obligations to hedge fund Alameda Research.

FTX’s founder also misguided investors about the sustainability of the company.

Bankman-Fried pleaded not guilty despite the weight of the evidence.

Sam Bankman-Fried acknowledged violating the company’s risk management policies but did not believe he was criminally liable.


FTX recovers $5bn but extent of losses still unknown

Bed Bath & Beyond sink further in early 2023

Bed Bath & Beyond: Bed Bath & Beyond announced a growing crisis on Thursday after suffering yet another significant setback.

The retailer declared that it lacked the funds necessary to settle its debts.

As a result, the business missed payments on its JPMorgan credit line and issued a foreboding bankruptcy notice.

Shares of Bed Bath & Beyond fell later on Thursday after-hours, briefly stopping trade.

The stock’s market cap decreased by 22% to settle at around $295 million.

The news

Bed Bath & Beyond disclosed that the company lacked the funds necessary to repay the loans covered by the Credit Facilities in a securities filing.

Without adequate resources, the business may have to think about other options.

Restructuring its debts in accordance with the US Bankruptcy Code is one of its choices.

Bed Bath & Beyond is now striving to reduce expenses by undertaking a number of things, such as:

  • Closing stores
  • Lowering capital expenditures
  • Negotiating lease deals with landlords

The business did, however, offer a caution, stating that the steps might not be effective.

Challenging times

The latest Bed Bath & Beyond filing is another evidence that the retail company’s time is running out as sales are falling short and debts are mounting.

Additionally, it coincides with a period of economic transition during which inflation has been straining consumers’ purse strings.

In addition, consumers are spending more on dining out or vacations than on household items.

Other difficulties include Bed Bath & Beyond reducing credit limits and tightening credit terms because it needed early payments in the second quarter of its fiscal year.

They impeded the business from properly stockpiling products in anticipation of the holiday season, according to the filing.

Bed Bath & Beyond also disclosed that prepayments were necessary from suppliers.

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The asset-backed loan with JPMorgan has an outstanding balance of $550 million with the company.

In addition, Bed Bath & Beyond owes Sixth Street $375 million as a result of the credit facility’s expansion in August 2022.

Unsecured notes amounting to about $1.2 billion are included in the company’s debt load.

The notes’ maturity dates, which are split over 2024, 2034, and 2044, have been trading at depreciated values.

Bed Bath & Beyond previously said that it was unable to restructure some of its debt after informing investors that it intended to use more credit to settle its debts less than a month later.

The company has spent a lot of money lately.

Bed Bath & Beyond spent $890 million in cash on Thursday over the course of the nine months that concluded on November 26.

The business disclosed that it still had $225.7 million in cash as of that date.

Early warning

Bed Bath & Beyond issued a warning earlier this month that the business was thinking about declaring bankruptcy due to a lack of funding.

The business had had worse-than-expected sales, raising the possibility that it wouldn’t have enough money to pay its bills.

At the time, CEO Sue Gove insisted that the business’s priorities were revitalizing Bed Bath & Beyond and guaranteeing that its brands remained popular with consumers.

Following weeks of Bed Bath & Beyond’s “going concern” warning about not being able to pay bills after the worse-than-expected quarter.

Other options

Bed Bath & Beyond has been looking into solutions recently.

The business is debating securing funding to keep it afloat in the event that it has to file for bankruptcy.

In an effort to find a buyer and help keep its doors open for big chains, the company is presently going through a sales process.

Bed Bath & Beyond is also looking for lenders that can offer funding to keep the business operating in the scenario that it needs to seek bankruptcy protection.

“Multiple paths are being explored, and we are determining our next steps thoroughly, and in a timely manner,” a spokeswoman said last week.

Private equity investor Sycamore Partners has expressed desire to buy the company.

Buybuy Baby, which has outperformed the bigger company, is of interest to the firm.

Buybuy Baby is expected to continue to exist going ahead, according to sources.