Highlights of the Week – FTX, QuadrigaCX, Brazilian Law, and More

It was a busy news week for the digital assets sector with various developments involving the FTX proceedings, wallets waking up, and restructuring plans.  The following are a look at what occurred over this time.

QuadrigaCX Wallets Wake Up

While it may be the FTX proceedings that continue to dominate headlines, the most surprising development of the past week involved an exchange that went defunct years ago – QuadrigaCX.

A wallet associated with the exchange, which was long-thought to be inaccessible, woke up after years of dormancy.  This raised big questions, as it was the very same wallet that accounting giant Ernst & Young accidentally sent over 100BTC to while handling the exchanges bankruptcy proceedings in 2019.  At the time, it was believed that only the deceased CEO of QuadrigaCX, Gerald Cotten, had access to the wallet.

With rumours over the years speculating that his death was faked, and this development showing that someone out there does indeed have access to the funds, crypto sleuths have once again jumped in to action trying to figure out who is responsible.

Unfortunately, the individual that appears to have access also seems to be aware of what ‘mixing' services are, having sent a large chunk of BTC to Wasabi in an attempt to obfuscate their destination.

With scores of Canadians still owed huge amounts of capital stemming from the collapse of this exchange, expect to hear the name QuadrigaCX again as this saga continues in to 2023.

FTX Developments

Whether it be industry specific sites, or mainstream media, there has been no escaping the FTX drama which has been unfolding as of late.  This past week was particularly notable as it saw the following.

• Sam Bankman-Fried extradited to the United States
• Sam Bankman-Fried released on $250,000,000 bail
• A litany of charges laid by the SEC and CFTC
• Caroline Ellison taking a plea deal with the SDNY

Looking forward, there appears to be no end in sight for the FTX saga, as the team responsible for overseeing its bankruptcy proceedings are already working to block attempts by companies like BlockFi from being awarded, perceived, rightfully owned assets.  This, combined with a concerted effort to have political parties return donations that were the proceeds of crime, mean that we will be discussing FTX again sooner, rather than later.

Bankruptcies and Restructuring Plans

PoW miners have had a rough go as of late, as the price of BTC on the open market has dropped well below the cost of production.  This continued decline throughout the year culminated in the largest publicly traded mining outfit, Core Scientific, filing for its own Chapter 11 Bankruptcy.

Looking beyond the troubles of Core Scientific, clients of Voyager, another company in the midst of its own bankruptcy, were given a glimmer of hope as it was announced that Binance.US placed a winning bid to purchase over $1B in assets from the former lending platform.

Brazilian Law

Meanwhile, Brazilian President Jair Bolsonaro signed a new bill surrounding the regulation of cryptocurrencies in to law.  Within this framework digital assets deemed securities are set to be overseen by the Brazilian SEC.  While other cryptocurrencies like Bitcoin fell short of being deemed legal tender, they are now viewed as a legal method of payment throughout the nation.

This signing highlights a growing trend of meaningful adoption of digital assets in Central and South America.  Many have pointed to persistent inflation and high levels of remittance as the underlying cause for this.

With this adoption expected only increase over time, regulators responsible for the aforementioned bill also made sure to include new requirements for centralized exchanges to draw a clear line between client and exchange assets.