Around the block

Two noteworthy items this month:

1. FTX founder Sam Bankman-Fried arrested

• The Southern District of NY, SEC and CFTC have separately charged FTX founder Sam Bankman-Fried (SBF) with multiple charges of fraud, conspiracy and money laundering.
• New FTX CEO, John Ray highlighted the lack of recordkeeping, controls, management and corporate governance by FTX and Alameda.

2.  Bitcoin miners continue to struggle

• Bitcoin mining stocks have declined over 80% this year.
• As we wrote in our September edition, risks to miner’s business model have been amplified by the September Ethereum merge converting from proof-of-work (mining) to a proof-of-stake (validation).
• Miners are being squeezed by elevated costs and diminishing rewards since they are primarily compensated through newly minted bitcoin that remains mired in the ongoing crypto winter.

Industry developments

• Robinhood Markets (HOOD) remains under pressure as the SEC could accelerate new market structure proposals in addition to the potential liquidation of the 56 million shares held by FTX founder SBF.
  
• IBM is shuttering its TradeLens blockchain system designed for shipping giant Maersk as well as its blockchain project with the Australian Stock Exchange.

Regulatory developments

• The SEC offered a sample letter for public companies asking for full disclosure of crypto exposure under existing securities laws.
  
• The New York Department of Financial Services proposed a new regulation outlining state fee assessments for supervising NY regulated crypto firms

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