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Further FTX Fallout and Celebrity Backers Named in Lawsuit

Steve Miley trader
Updated 17 Nov 2022

The FTX collapse continues to have contagion impacts as the crypto exchange Gemini and Genesis Global Capital, a major crypto player, have been pulled into the negative spotlight. In related news, a class action lawsuit has been launched against FTX’s former chief executive, Sam Bankman-Fried, naming numerous celebrities as defendants.


FTX Crypto Contagion Spreads to Gemini and Genesis

We reported yesterday that BlockFi, Voyager Digital and were all in the spotlight from the contagion created by the recent November collapse of the major cryptocurrency exchange FTX. In further fallout from this event, the contagion continues as both the Gemini crypto exchange and a major crypto player Genesis Global Capital, are now also in that unwelcome spotlight.

Gemini is a cryptocurrency exchange and custodian that was founded by the Winklevoss brothers and has seen a rush of withdrawals. Data from blockchain platform Nansen indicate that on Wednesday, Gemini saw outflows that totalled $563 million (offset by only $78 million in inflows). The withdrawal urgency came as Gemini earlier on Wednesday paused withdrawals from its yield-generating Earn program.

Genesis Global Capital, a significant crypto player also on Wednesday, suspended customer redemptions in its lending business. They cited the failure of crypto exchange FTX.  In a tweet, Digital Currency Group, a venture capital firm and parent of Genesis said as well as of crypto asset manager Grayscale “Today Genesis Global Capital, @GenesisTrading's lending business, made the difficult decision to temporarily suspend redemptions and new loan originations” adding “This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion.”

US Lawsuit Against FTX Names Celebrity Backers

U.S. court filings showed a class action lawsuit has been launched against FTX’s former chief executive, Sam Bankman-Fried, by investors alleging that the FTX’s yield-bearing crypto accounts violated Florida law. The lawsuit filed in Miami over the crypto exchange’s collapse indicates that FTX yield-bearing accounts were unregistered securities and unlawfully sold in the United States. It names as defendants a host of celebrity backers, which includes Tom Brady, Larry David, Gisele Bündchen, Shaquille O’Neal, and Naomi Osaka.

Binance’s CZ Has More Harsh Words for SBF

Binance CEO, Changpeng Zhao, known as “CZ”, has continued a war of words with fallen “King of Crypto”, FTX’s former CEO, Sam Bankman-Fried (SBF) after SBF stated in a series of tweetsAt some point I might have more to say about a particular sparring partner, so to speak. But you know, glass houses.  So for now, all I'll say is: well played; you won.” In n interview with CNBC, CZ stated “When he tweets about a sparring partner, his house is burning and all this is happening, he’s losing focus. I didn’t know this problem existed in FTX before otherwise we would’ve sold those FTT tokens a long time ago,” adding “That day when he tweeted that, he should have been working on other things. He should not be writing tweets.”

Steve has 29 years of financial market experience including 3 years at Credit Suisse and 15 years at Merril Lynch. Steve is the Academic Dean for The London School of Wealth Management and has won many awards from Technical Analyst Magazine.