🔪 1 big thing: Terms of Use treachery 

Illustration of a bomb with lit fuse and Celsius logo

🐩 2. Charted: A tale of two altcoins

 🌄 3. A course on money and the good life

Photo illusration of Andrew Bailey with columns and digital coins.

🏃🏻‍♀️ 4. Catch up quick

Top coins

🎄 5. Culture hash: Bitcoin on sale!

Bitcoin Christmas ornament at Urban Outfitters

Et tu? Thursday is about betrayal in the Terms of Use. Plus, a crash course on the good life. 

So...what did everybody think about the thing? crypto@axios.com

Today's newsletter is 1,149 words, a 4-minute read.

This newsletter was edited by Pete Gannon and copy edited by Carolyn DiPaolo.

👷 Blockchain workers who have fallen on hard times should check out the IlluminatiJOBS Telegram channel. —C & B

Crypto

green

Follow how cryptocurrency and blockchain are upending markets and the regulatory shifts. With Brady Dale.

Axios Crypto

🥾 1 big thing: The U.S. is driving crypto business out

Illustration of a briefcase combined with an emergency exit sign

📊 2. Only Bitmain's very best miner remains profitable

👛 3. Hardware wallet demand is booming

A hand holding a Ledger Stax with a computer screen in the background.

🚤 4. Catch up quick

📺 5. Culture hash: Have a seat

Rep. Maxine Waters would like to see SBF on stage one more time. 

This newsletter might seem to be less about FTX, but the truth is the downward vibe that unwinding has put on everything is the larger story behind all these seemingly discrete stories. Read on!

Is anything in crypto not about the FTX unwinding? crypto@axios.com

Today's newsletter is 1,118 words, a 4-minute read.

A family member in Kansas told me he's been trying to buy a Ledger, but the nearest Best Buy told him that they are going super fast. Have any of you tried to buy one recently? —Brady

📞 1 big thing: A phone call with SBF

Photo illustration of Sam Bankman-Fried with downward arrows and abstract shapes.

👨‍👧‍👦 2. Charted: Bitcoin diverging from... bitcoin?

Bankrupt crypto lender wants to return deposits, but it's not that simple

🙏 3. BlockFi moves to return deposits now, your honor 

Illustration of a pixelated coin sticking out of a pixelated wallet.

🚕 4. Catch up quick

🙋‍♂️ 5. The senator has questions (a lot of them)

Sen. Wyden asks questions during a hearing, Feb. 8, 2022.

For a minute it looked like part of this newsletter would not be related to FTX today, but... nope. It all ties back to the big story today, too. 😶‍🌫️

If something out there is interesting all of you besides the big disaster, please let us know: crypto@axios.com.

Today's newsletter is 1,415 words, a 5-minute read.

This newsletter was edited by Pete Gannon and copy edited by Rob Reinalda. 

All the trader types are saying that the big candle on bitcoin and ether price last night wasn't the Brazil news, but it sure seems like the market must have been reacting to something tangible. —C & B

👀 1 big thing: The fate of the SBF bill

CFTC Chair Rostin Benham at a Senate hearing. 

👻 2. Charted: VGX gets a second life

⛸ 3. Catch up quick

🍏 4. Apple stymies NFTs in Coinbase Wallet

Illustration of the Apple logo made out of a repeating hundred dollar bill pattern. 

🍲 5. Culture hash: Plz, ser, I want some more

TGIF! On iPhones, Apple can't afford to let you give things away, plus the new crypto mood in the U.S. Congress.

🏖 Who's betting the crypto scene will just kinda chill this weekend? No doubt! So if you're bored, feel free to email: crypto@axios.com.

Today's newsletter is 1,165 words, a 4-minute read.

🙀 The New Yorker has a nuanced piece on the philosophy driving SBF (and the crisis of faith his fall engendered).—C & B

💼 1 big thing: IRS playing catch-up

😖 2. Charted: Just not looking

👟 3. Catch up quick

🎠 4. Circle will stay private for now

Illustration of several U.S. coins as well as a coin with the Circle logo 

☸️ 5. Culture hash: Wheels within wheels

Hello! More signs of the times today with the inevitable breakup of one of the big crypto SPACs finally being confirmed.

Of note: Crystal is out this week so help Brady keep up: crypto@axios.com.

Today's newsletter is 1,154 words, a 4-minute read.

🐶 Good news for dogecoin may be bad news for everyone else. WOW! —Brady

National

Kraken, one of the biggest and longest-standing crypto exchanges, said Wednesday it would be reducing its workforce by 30% or some 1,100 people. 

What's happening: The reduction would put the team size back to where it was 12 months ago, the exchange said, citing a need to "adapt to current market conditions."

So-called Krakenites were informed Wednesday morning, the company said. 

Why it matters: A true giant in crypto is now flinching in the face of what now seems a more certain, long slog that will be this crypto winter, joining the rash of tech firms that have already made cuts. 

Details: "Negative influences on the financial markets have continued and we have exhausted preferable options for bringing costs in line with demand," Kraken CEO and co-founder Jesse Powell wrote in the company blog post. 

Kraken is the third-largest crypto exchange based on spot-trading volume, according to CoinMarketCap.com.

Catch up quick: The arc of Kraken events this year is bookended by what the rest of the majors in crypto have already announced: belt-tightening. Here it is in reverse chronological order: 

FTX approached Kraken as a potential rescue partner.

Kraken founder and chairman Jesse Powell stepped down as CEO of the exchange. 

 The firm announced a hiring spree, right before an investigative story into the company's corporate culture was published.

Kraken crypto exchange lays off 30% of workforce

Kraken is one of the biggest and longest-standing crypto exchanges.

Illustration of a tentacle about to shake hands. 

Cryptocurrencies

Technology

Lawmakers gathered on Thursday to discuss the events that led to crypto exchange FTX collapse, amid renewed calls from within their ranks — and from the public — for industry oversight.

Why it matters: The spectacular flameout of FTX — and the contagion that preceded and followed it — could finally provide momentum for U.S. regulation of the industry.

What they're saying: Senate Agriculture Committee Chairwoman Debbie Stabenow in her opening remarks highlighted the "lack of clear, consistent rules" that have allowed an industry to flourish, while American consumers lose billions.

"When exchanges accept customer funds for trading, they must not be allowed to gamble with those funds," Sen. Stabenow (D-MI) said, referencing one of the issues behind FTX's unwinding.

Details: Commodity Futures Trading Commission chair Rostin Behnam was the sole witness at Thursday’s hearing.

He emphasized the need for lawmakers to grant his agency the authority to create rules and oversee crypto trading.

"We need surveillance of market activity," Behnam said. 

Behnam also expressed support for Sen. Stabenow's Digital Commodities Consumer Protection Act (DCCPA,) which he says would have "prohibited" some of the actions at FTX from taking place.

Catch up quick: The most recent version of the DCCPA, which provides for a definition of a "digital commodity" would place many cryptocurrencies under the purview of the CFTC. 

Sen. Stabenow said during the hearing that the legislation would still allow the Securities and Exchange Commission to have oversight over crypto that it deems securities.

The intrigue: Sen. Cory Booker homed in on the influence that FTX and its former chief, Sam Bankman-Fried, might have had on the bill — which is sometimes called the "SBF Bill" — asking chair Behnam about FTX involvement.

Behnam said Sen. Stabenow and ranking member Sen. John Boozman (R-Ark.) were "inclusive in their exercise," and met with FTX as well as others. 

The bottom line: Behnam emphasized the need for for a balance between "sufficient statutory direction" that is not overly specific to allow the rulemaking to evolve with the market.

Sam Bankman-Fried doesn't know what happened to his Twitter stake

Judge in FTX case grants privacy to customers, for now

FTX starts bankruptcy proceedings and Bankman-Fried resigns as CEO

Senate hearing on FTX collapse spotlights proposed crypto rules

FTX implosion could finally provide momentum for U.S. regulation of the industry.

CFTC Chair Rostin Behnam testifies to senate ag committee on FTX. Source: Bloomberg / Contributor

Lawmakers gathered on Thursday to <a class="gtmContentClick" data-vars-link-text="discuss the events" data-vars-click-url="https://www.agriculture.senate.gov/hearings/why-congress-needs-to-act-lessons-learned-from-the-ftx-collapse" data-vars-content-id="78c04298-ac12-4291-8ddc-0939a38a44e1" data-vars-headline="Senate hearing on FTX collapse spotlights proposed crypto rules" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.agriculture.senate.gov/hearings/why-congress-needs-to-act-lessons-learned-from-the-ftx-collapse" target="_blank">discuss the events</a> that led to crypto exchange <a class="gtmContentClick" data-vars-link-text="FTX collapse" data-vars-click-url="https://www.axios.com/2022/11/29/sam-bankman-fried-100000-ftx-cftc-regulation" data-vars-content-id="78c04298-ac12-4291-8ddc-0939a38a44e1" data-vars-headline="Senate hearing on FTX collapse spotlights proposed crypto rules" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/11/29/sam-bankman-fried-100000-ftx-cftc-regulation" target="_self">FTX collapse</a>, amid renewed calls from within their ranks — and from the public — for industry oversight.Why it matters: The spectacular flameout of FTX — and the contagion that preceded and followed it — could finally provide momentum for U.S. regulation of the industry.

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Bankrupt crypto lender BlockFi wants to urgently resume platform withdrawals, so customers can have their funds back. 

Why it matters: While that move may seem logical (especially to customers), it would be precedent-in-the-making for future crypto cases, touching on the all-important hierarchy of unsecured creditors.

The big picture: "There are precedents in a non-crypto exchange situation. The law is very clear," Evan Jones, partner in the bankruptcy and restructuring group of O’Melveny & Myers, tells Axios. 

A client at a regulated broker-dealer would be first in line among unsecured creditors to get their money back in the event a firm failed, Jones explains, referencing those situations covered by the Securities Investor Protection Act (SIPA).

"That law is developing with regard to crypto exchanges," he says. 

Driving the news: During BlockFi's first hearing Tuesday in New Jersey, Kirkland Ellis partner Joshua Sussberg, representing BlockFi during the bankruptcy proceeding, said the firm intends to quickly file a motion requesting the resumption of customer withdrawals. 

"You would not be surprised, your Honor, from exchange to exchange, the Terms of Use are not necessarily the same," Sussberg said, explaining that BlockFi has promised its Wallet customers that what's theirs is theirs. 

“We do not believe this is the property of the estate."

Yes, but: That doesn't mean bankruptcy courts will allow BlockFi, FTX, Celsius and Voyager customers to be treated as SIPA liquidations would, in preference to general unsecured creditors.

A creditors' committee would have to be formed and agree with BlockFi's plans.

Zoom in: Terms of Service is "the key issue" in token ownership, according to Evans. They vary from platform to platform, and their makers may not necessarily have held up their end of the contractual agreement. 

After all, FTX's terms forbid trading with customer funds. 

BlockFi's says: "The title to the cryptocurrency held in your BlockFi Wallet shall at all times remain with you and shall not transfer to BlockFi."

The bottom line: Customers are in uncharted waters.

While that move may seem logical (especially to customers), it would be precedent-in-the-making for future crypto bankruptcy cases.

Bankrupt crypto lender BlockFi wants to urgently resume platform withdrawals, so customers can have their funds back. Why it matters: While that move may seem logical (especially to customers), it would be precedent-in-the-making for future crypto cases, touching on the all-important hierarchy of unsecured creditors.

Celsius Network's bankruptcy proceeding took an interesting turn this week.

Driving the news: Terms of Use, a topic that's becoming increasingly popular in crypto bankruptcy cases, could determine who ends up with $18 million in stablecoins.

The crypto lender wants to sell that stockpile to keep the lights on, while customers with trapped funds on the halted platform say those assets belong to them.

The latest: The committee formed to represent Celsius' account holders is now saying that those stablecoins might belong to Celsius, and not customers of its Earn program that were promised yield for keeping coins on the platform.

Details: Seven Celsius account holders were appointed to the Official Committee of Unsecured Creditors (UCC), to represent the interests of the debtor's account holders as well as unsecured creditors by the U.S. Trustee's office in July.

That group said that based on their interpretation of the contractual agreement struck per the platform's Terms of Use, allowing Celsius to sell stablecoins made sense, according to court documents filed Tuesday. 

What they're saying: "The Committee is mindful that its position on these issues may not be popular among certain (or many) Account Holders who contend they have ongoing ownership of Earn Assets," they said.

What others are saying: Other creditors object; they object a lot. 

Some Earn account holders have argued that a version of Terms of Use was ambiguous because it described the transaction between Celsius and the account holders as a "loan."

The intrigue: A loan and a transfer in title aren't "mutually exclusive" concepts, the UCC said, explaining that those terms can be used interchangeably in the context of securities. 

"It is common for a loan of securities to a broker to also constitute a transfer of title thereto (or the incidents of ownership thereof) so that the broker can sell, lend, hypothecate, or rehypothecate the securities," according to the filing submitted by the UCC.

The bottom line: The sale of the $18 million in stablecoins would, however, only extend Celsius' operational runway by one month to April 2023. 

That is time the firm needs to make sure "the Debtors are not pressured to accept a low offer with respect to any reorganization or sale" the UCC said. 

What's next: Celsius' sale hearing on Dec. 8.

Celsius creditors wage war over stablecoin ownership

The crypto lender's bankruptcy proceeding took an interesting turn this week.

Celsius Network&#x27;s bankruptcy proceeding took an interesting turn this week.Driving the news: Terms of Use, a topic that&#x27;s becoming increasingly <a class="gtmContentClick" data-vars-link-text="popular" data-vars-click-url="https://www.axios.com/2022/11/30/blockfi-return-customer-deposits-bankruptcy" data-vars-content-id="940e7b06-097a-4018-a351-b174df3ccb36" data-vars-headline="Celsius creditors wage war over stablecoin ownership" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/11/30/blockfi-return-customer-deposits-bankruptcy" target="_self">popular</a> in crypto bankruptcy cases, could determine who ends up with $18 million in stablecoins.

Sam Bankman-Fried said he didn't commit fraud and didn't try to buy off politicians, fielding live questions at a packed New York City conference less than a month after his company rapidly imploded and filed for bankruptcy. 

Why it matters: Bankman-Fried, the founder and former CEO of crypto exchange FTX, is under scrutiny from regulators and politicians over the total lack of oversight at the company, which saw more than $30 billion of value wiped out in a matter of weeks. Customers have seen millions of dollars vanish. 

Details: Speaking via webcast at the New York Times Dealbook conference on Wednesday, Bankman-Fried addressed the accusation that the trading firm he controlled, Alameda Research, was improperly moving money in and out of FTX. 

"I didn't knowingly commingle funds," he said. 

He added: "I didn't ever try to commit fraud on anyone," and said that FTX didn't buy elections, nor regulators like the Securities and Exchange Commission Chairman Gary Gensler.

Bankman-Fried has been a significant contributor to politicians.  

Of note: Bankman-Fried, in his signature t-shirt and speaking from the Bahamas, was asked whether the investors and VCs that backed FTX bore responsibility.

"I don't think they bear responsibility."

He was also asked about the optics behind the fact that not only was venture capital firm Sequoia Partners an investor in FTX, but Bankman-Fried was an investor in the firm as well.

"Well after they invested in FTX, there may have been a small investment to some of their funds. It seemed like a good opportunity. Didn't think too much about it," he said.

Zoom in: Bankman-Fried believes certain customers can be made whole, despite the company's bankruptcy and poor bookkeeping. 

“I think there's a chance customers could be made a lot more whole, I don't know, maybe even fully whole," he said referencing customers in the U.S. and Japan entities. 

Context: Prior to the New York Times event, Bankman-Fried was interviewed by Axios, where he said he was down to $100,000 in his bank account, and spoke about his failures as well as continued dedication to effective altruism. 

Catch up quick: FTX filed for bankruptcy on Nov. 11 and Bankman-Fried stepped down as CEO, with corporate turnaround veteran John Jay Ray III succeeding him. 

The newly appointed chief Ray said the crypto exchange's books were a shambles. 

Meanwhile, Bankman-Fried has been telling his version of the story. 

"Look, I screwed up," he said on Wednesday. "I was the CEO, and that means I was responsible." 

What we're watching: The Senate hearing Thursday with Commodity Futures Trading Commission Chairman Rostin Behnam set to speak about FTX. 

Sam Bankman-Fried says he didn't "knowingly commingle funds"

He spoke to a conference just weeks after FTX filed for bankruptcy.

Sam Bankman-Fried, speaking at the NYT Dealbook conference Wednesday. Photo: Getty Images. 

Sam Bankman-Fried said he didn&#x27;t commit fraud and didn&#x27;t try to buy off politicians, fielding live questions at a packed New York City conference less than a month after his company rapidly imploded and filed for bankruptcy. Why it matters: Bankman-Fried, the founder and former CEO of crypto exchange FTX, is under scrutiny from regulators and politicians over the total lack of oversight at the company, which saw more than $30 billion of value wiped out in a matter of weeks. Customers have seen millions of dollars vanish.

Crystal Kim

Stories

Senate hearing on FTX collapse spotlights proposed crypto rules

Celsius creditors wage war over stablecoin ownership

Sam Bankman-Fried says he didn't "knowingly commingle funds"

Bankrupt crypto lender wants to return deposits, but it's not that simple

Kraken crypto exchange lays off 30% of workforce

Newsletter editions

So long!

It didn't take a crystal ball 🔮

iOS 🙅‍♀️ NFTs

Celsius has some money

💸 SBF has $100,000