Genesis and DCG Accused of Accounting Fraud, Coinbase Cuts More Jobs

Jan 10, 2023
Most Important Daily
Data and News for Digital Assets

Crypto Daily Report

January 10, 2023
THIS MESSAGE IS SENT SOLELY TO MEMBERS OF FS INSIGHT
Tickers on this report: APT, BTC, COIN, ETH
Market Update
  • After retracing significant gains at the close yesterday, traditional indices are roughly flat on the day, while US Treasury yields are turning higher. Many are looking forward to Thursday’s CPI report release, which will have large implications on the Fed’s interest rate decisions on February 1st. Crypto markets are continuing their constructive week, with BTC and ETH rising 0.72% and 0.67%, respectively. The total crypto market cap is up for the third consecutive day, rising to $811 billion (+0.64%). In addition to liquid staking derivatives outperforming this week, alt layer-1 Aptos (APT) has shown impressive returns, gaining over 42% this week and being the best performer in the top 100 tokens over the last 24 hours (+7.20%).
  • In the latest episode of the Genesis/DCG and Gemini saga, Cameron Winklevoss, the co-founder of Gemini has released a second open letter to the board of DCG. Winklevoss directly accuses Genesis and DCG of making false statements and misrepresentations to Gemini and the public regarding Genesis's solvency and financial health. Winklevoss alleges that Genesis and DCG committed accounting fraud when DCG bailed out Genesis following the collapse of 3AC. The letter addresses two main issues with how DCG and Genesis handled the situation. The $1.2 billion in liabilities that DCG was taking on for Genesis was through a promissory note due in 2032. The promissory note was characterized as a “current asset” on DCG’s balance sheet, which generally refers to cash, cash equivalents, or other assets that can be exchanged for cash within one year. Winklevoss argues that the promissory note clearly doesn’t qualify as a current asset, as it is due in 2032. Secondly, he argues that the note should not be valued at $1.1 billion and rather should be heavily discounted to represent the present value of the note. For those two reasons, Genesis’s financial health seemed much rosier than it truly was. Winklevoss goes on to ask the DCG board to remove Barry Silbert as the CEO of DCG and immediately install a new leader who can and will work with Gemini to develop a mutually beneficial solution.
  • Coinbase (COIN), the popular crypto exchange, is continuing its cost-cutting efforts amid the bear market, announcing about a 20% reduction in its workforce. Coinbase had previously cut jobs back in June and is now cutting another 950 jobs, which should help reduce the company’s operating expenses by 25% for the first quarter of 2023. CEO Brian Armstrong said, “it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario” and that cutting more jobs was absolutely necessary. In addition to reducing headcount, Coinbase will be shutting the doors on some of its projects with a lower probability of success. The cost-cutting efforts are not unique to crypto companies, as multiple other large tech firms, such as Amazon and Salesforce have announced layoffs in recent weeks. Investors are reacting positively to Coinbase’s efforts, with shares rising 5.02% today.
Daily Technical Strategy
Genesis and DCG Accused of Accounting Fraud, Coinbase Cuts More Jobs

Mark L. Newton, CMT

Head of Technical Strategy

Bitcoin's rally over the last eight of 10 days to kick off the new year hasn't been nearly as strong as seen in other coins, with gains of just 5.0% off the 12/31/22 lows of $16,471. While BTCUSD might gain some ground relatively speaking on signs of risk assets rolling over into late January, prices have pushed up to near-term levels of resistance, shown on the daily BTCUSD chart below. Bitcoin has formed a TD Sell Setup right near $17,400, which might prove to be a strong level in the short run. To have faith of a larger rally approaching, Bitcoin requires a move up above December 2022 peaks at a minimum, near $18,373 which looks premature at this time. Support on weakness lies at $16.6k, and then $16.3k, with breaks of that leading to a likely pullback to levels just under $16k before BTCUSD bottoms out. Overall, more is needed to have faith in this rally given the ongoing structural downtrend from last Fall.

Daily Important Metrics

Crypto Size

Bullish signal is tied to the crypto market growing

Market Cap $851B $-3.8B (-0.45%)

BTC Dominance   39.06% (+0.30%)

Stable Coins

Increase in circulating stablecoins is a Bullish signal

In Circulation $66B (-0.00%)

In Exchanges $18B (-0.38%)

BTC Metrics

A decrease in Bitcoin on exchanges is bullish, indicates investors are moving coins to cold storage

# BTC in Exchanges 2.3M (-0.15%)

Funding Rates

Positive funding rates indicate traders are Bullish

Aggregate 0.0021% (-0.0004)

Binance 0.0099% (-0.0001)

Bitfinex 0.0119% (0.0015)

Bitmex 0.0099% (-0.0001)

ByBit -0.0107% (-0.0177)

Deribit 0.0007% (0.0007)

Huobi 0.0028% (-0.0329)

Kraken 0.0150% (0.0115)

Mean 0.0021% (-0.0004)

OKex 0.0119% (0.0171)

SENTIMENT

Genesis and DCG Accused of Accounting Fraud, Coinbase Cuts More Jobs

BMI: 59 (97%)

Futures All Exchanges

A positive spread between Futures Prices and Spot Prices is Bullish

CME BTC Price $17,340 (0.55%)

Spot Basis   $27.49 (0.16%)

Volume 810,622 (182%)

Open Interest  385,220 (-0.56%)

Options All Exchanges

Higher open interest change in a bull market is bullish for the sector

Volume 14,753 (263%)

Open Interest 189,013 (3.64%)

Volume Put/Call Ratio 0.6161 (43%)

Open Interest Put/Call Ratio 0.4926 (0.09%)

All metrics as of January 10, 2023 12:05 PM
Crypto Prices
SymbolMarket CapLast PriceDaily ChangeYear to DateRelative to BTC YTD
BTC$333B$17,313-0.21%4.51%
ETH$163B$1,331-0.71%11%6.53%
ADA$11B$0.3174-2.04%29%24%
DOGE$10B$0.0762-3.56%8.69%4.18%
MATIC$7.4B$0.8455-3.14%11%6.43%
SOL$6.0B$16.14-5.40%63%59%
DOT$5.7B$4.90-2.71%13%8.30%
LINK$3.1B$6.13-1.57%10%5.98%
NEAR$1.4B$1.62-4.61%28%23%

All prices as of January 10, 2023 11:58 AM

Exchange Traded Products (ETPs)
SymbolPremium to NavLast PriceDaily ChangeYear to DateRelative to BTC YTD
GBTC-38%$9.6512%16%12%
BITW-58%$6.852.54%28%23%
ETHE-50%$6.764.64%42%38%
BTCC0.24%$3.200.31%5.61%1.10%

All prices as of January 10, 2023 4:58 PM

Stocks
SymbolMarket CapLast PriceDaily ChangeYear to dateRelative to BTC YTD
PYPL$216B$77.370.38%8.64%4.13%
SQ$76B$68.63-0.62%9.21%4.71%
COIN$65B$39.874.18%13%8.15%
SBNY$18B$113-2.74%-2.26%-6.77%
HOOD$15B$8.52-0.41%4.61%0.10%
MSTR$6.1B$1792.20%26%22%
SI$4.2B$11.741.65%-33%-37%
MARA$3.5B$5.083.57%48%44%
RIOT$2.7B$5.165.52%52%48%
MOGO$223M$0.6496-1.53%23%18%

All prices as of January 10, 2023 12:00 PM

News
QUICK BITS
Gemini's Cameron Winklevoss Calls For Barry Silbert's Ouster From DCG
CoinDesk
Winklevoss, on behalf of Gemini, called for Silbert's removal for his involvement in the disagreement between Genesis and its creditors.
MARKET DATA
Grayscale Bitcoin Trust Shares Jump 12%, Narrowing Discount
Decrypt.co
The discount for Grayscale's Bitcoin product hit its lowest value since mid-November, despite investor discontent and legal troubles.
DOSE OF DEFI
DeFi Protocol Yearn Finance Will Now Let Anyone Create Curve Reward Farms
CoinDesk
Yearn was among the first yield aggregators in the now-mature decentralized finance ecosystem.
REGULATION
NY law firm investigates potential ‘securities fraud’ at Core Scientific
Coin Telegraph
The investigation was prompted by a report from Culper Research, which alleged that Core Scientific had “wildly oversold” its mining and hosting businesses.
Mark Cuban’s full deposition ordered in proposed Voyager-promotion lawsuit
The Block
U.S. Magistrate Judge Lisette M. Reid denied Dallas Mavericks owner Mark Cuban's request to separate the deposition into two sessions. The post Mark Cuban’s full deposition ordered in proposed Voyager-promotion lawsuit app...
CFTC Sues Trader Over Alleged Mango Markets Scam
Bitcoinist
The Mango Markets exploit, which was just one of the number of hacked and exploited dApps last year, was a remarkable one. The exploit led to roughly $114 million lost from the decentralized digital-asset exchange trading platform. According to the l...
Digital pound won’t track retail transactions, UK minister says
The Block
A digital currency platform would give authorities visibility into banks and not citizens, a treasury minister said in evidence to Parliament. The post Digital pound won’t track retail transactions, UK minister says appear...
South Korean regulators target Bithumb in new probe
Coin Telegraph
South Korean National Tax Service agency launches an investigation on Bithumb, according to local reports.
UK ‘Fully Behind’ Stablecoin for Wholesale Settlements, Treasury Official Says
CoinDesk
Crypto technology could “turbocharge all of those (financial) industries,” Economic Secretary to the Treasury Andrew Griffith said in a meeting.
HIRING
Coinbase to cut another 20% of its workforce in the second wave of layoffs
Coin Telegraph
Crypto exchange Coinbase announced a further restructuring plan that involves reducing its workforce by 950 employees to cut operational costs amid the bear market.

Reports you may have missed

Crypto markets are declining following news that most of the SEC’s lawsuit against Coinbase will proceed (more below). BTC (-1.27%) reached intraday highs of $71.8k before declining to $69k after the news. Rumors have circulated that Morgan Stanley and PNC will soon approve access to Bitcoin ETFs on their wealth management platforms. Together, Morgan Stanley and PNC hold over $1.5 trillion in client assets and likely will provide a tailwind...

Following the worst week of ETF flows since inception, BTC (+3.89%) is rebounding, rising to $69.6k, and ETH (+4.09%) has reclaimed the $3,500 mark. Last week’s outflows totaled $888 million, representing about a fifth of the inflows seen in the previous two weeks. ONDO, an institutional RWA protocol, is one of the top performers today, rising 7.61% as investors remain optimistic about the future of tokenized assets and their ability...

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