Crypto industry tightens up, Coinbase goes for settlement

“1.7 million people call Celsius their home for crypto”, says the homepage of Celsius Network. It is certainly the case that, just as crypto investors were dreaming of ‘moon’ and ‘lambo’, so were the crypto CEOs whom they trusted to “manage” their money.

The latest in the FTX saga is that the US Justice Department has taken control over 56 million shares that were bought by Sam Bankman-Fried in the Robinhood app. The total worth of these shares is around $456 million, and represents a 7.6% share of the total value. The stake is being claimed by BlockFi, which had also filed for bankruptcy after FTX and is currently being restructured.

The impact of FTX’s collapse is considered severe as far as the issue of regulating cryptocurrencies and their markets is concerned. A director in The Blockchain Association has said that the crypto industry is “in the crosshairs” of Washington. The fear here is that FTX will be “equated” with the entire crypto industry.

The fallout of FTX is evident in the scrutiny that Coinbase underwent from New York regulators to check the robustness of its compliance process.

Among the largest and most reputed crypto exchanges in the US, Coinbase has accepted a $100 million settlement, as per a report in CoinMarketCap. According to CoinMarketCap, the regulator found flaws in the KYC and AML systems of Coinbase. According to the report, there was “a deep backlog of transactions going unmonitored”. Sources in Coinbase described their compliance as being far ahead of other rivals.

Celsius customers who got both their hands and money burnt have some bad news to chew on. Around 6 lakh customers had opened accounts here with hopes of earning interest, but things did not go well in the cold crypto winter. Sadly, the latest ruling allows the bankrupt company to lay claim to this money as part of the bankruptcy procedure, and customers will be the last in the queue to receive them back. Celsius will thus be able to sell stable coins worth around $18 million to cover its expenditures. The company is expected to deplete its resources by March this year.


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