South African regulator, the National Consumer Commission (NCC) recently disclosed that it has unraveled a pyramid scheme known as ‘Obelisk’ which is a famous crypto mining company that defrauded over 4,000 citizens about $6 million.
Obelisk is a company that was established by a part of the team that worked on the Siacoin cryptocurrency. The main goal of the Obelisk developers is to build a community where ASIC mining is a preferable way of gaining coins.
After a series of complaints by investors, the NCC disclosed that it had to swing into action by investigating the activities of the company. Noting that most of its victims were gotten from different social media platforms.
Investors on the platform disclosed that they were charged between $18.75 and $24,000 per mining equipment on the platform which the NCC described as an outrageous amount. As if that was not enough, they were also asked to pay a certain initial fee at the point of registration which was undisclosed.
Also, for investors to be able to withdraw their funds, again they are mandated to pay another fee to upgrade their mining equipment.
In all of this, South African Regulator NCC disclosed that the company paid a smaller portion of the investor’s returns on their first investments to convince them to invest higher fees which is a gimmick synonymous with pyramid schemes to lure more investors.
However, problems began when investors discovered that the withdrawal button on their profiles had been suddenly deactivated making it impossible for them to withdraw their earnings.
In a bid to inquire about the issue, they were blocked and removed from the community groups they were added to. Also, the NCC disclosed that WhatsApp groups that investors were added to were estimated to be more than 20.
Investment in the crypto market has been growing across the globe which has also led to an increase in crypto scams and theft, as it was reported that over $10 billion was lost globally in 2021.
FTX Missing Billions Remain Mystery After Bankman-Fried Grilling
The mystery continues to shroud the missing billions at bankrupt crypto exchange FTX after its disgraced founder Sam Bankman-Fried denied trying to perpetrate a fraud while admitting to grievous managerial errors.
In his first major public appearance following the Nov. 11 implosion of FTX and sister trading house Alameda Research, Bankman-Fried said he “screwed up” at the helm of the exchange and should have focused more on risk management, customer protection and links between FTX and Alameda.
“I made a lot of mistakes,” the 30-year-old said Wednesday by video link at the New York Times DealBook Summit. “There are things I would give anything to be able to do over again. I didn’t ever try to commit fraud on anyone.”
Bankman-Fried’s participation was controversial given there are outstanding questions about how Bahamas-based FTX ended up with an $8 billion hole in its balance sheet and whether it mishandled customer funds. Reports that FTX lent client money to Alameda for risky trades have stoked such concerns.
Interviewed by New York Times columnist Andrew Ross Sorkin, who said Bankman-Fried was joining from the Bahamas, the fallen crypto mogul didn’t give a straight answer about whether he had at times lied.
Bankman-Fried told the summit that he “didn’t knowingly commingle funds.” At the same time, he said that FTX and Alameda were “substantially more” linked than intended and that he failed to pay attention to the trading house’s “too large” margin position.
He said he wasn’t running Alameda and added that he was “nervous about a conflict of interest.” No person was in charge of position risk at FTX, he said, describing the lack of oversight as a mistake.
Out of Control
The comments shed little light on the question of where client funds ended up as Bankman-Fried stuck to a hard-to-parse account of how Alameda ran up a massive margin position on the exchange.
The restructuring expert who took over the firm in bankruptcy, John J. Ray III, has painted a picture of FTX as a mismanaged, largely out-of-control company bathed in conflicts and lacking basic accounting practices, calling it the worst failure of corporate controls he’d ever seen.
Bankman-Fried faces a complex web of lawsuits and regulatory probes into alleged wrongdoing. Some observers speculate his public comments could be used against him in litigation.
The spotlight has also fallen on an apparent company culture of working and playing hard. Bankman-Fried said there were no wild parties and that he saw no illegal drug use. He added that he’s been prescribed drugs over time to help with focus and concentration.
The digital-asset sector is braced for widening contagion from FTX, which once boasted a $32 billion valuation before sliding into bankruptcy. It owes its 50 biggest unsecured creditors a total of $3.1 billion and there may be more than a million creditors globally.
A crypto lender, BlockFi Inc., filed for bankruptcy Monday after being buffeted by the wipeout. Embattled brokerage Genesis is striving to avoid the same fate.
BlackRock Inc. Chief Executive Larry Fink said earlier at the DealBook summit that most crypto companies will probably fold in the wake of FTX’s collapse. The world’s biggest asset manager was among firms stung by the chaotic unraveling of Bankman-Fried’s tangled web of 100-plus FTX-related entities.
Bankman-Fried has provided convoluted accounts on social media and in interviews with other news outlets about what led to FTX’s woes. Advisers overseeing the ruins of his business have slammed non-existent oversight.
As if such travails weren’t enough, the exact breakup of a $662 million outflow from FTX as it tumbled into bankruptcy remains another enigma. Bankman-Fried said in the summit interview that there was improper access to FTX after its spiral.
Treasury Secretary Janet Yellen, another speaker at the summit in New York, called the FTX debacle “the Lehman moment within crypto,” referring to the collapse of investment-banking giant Lehman Brothers in 2008.
Crypto markets have stabilized somewhat after lurching lower in November as the turmoil around FTX thickened. Even so, a gauge of the top 100 tokens is down more than 60% this year, hit by tightening monetary policy and a series of crypto blowups of which FTX is the most spectacular.
Bankman-Fried’s fortune at one point reached $26 billion, and just weeks ago he was described as the John Pierpont Morgan of digital assets, willing to throw around his wealth to bail out the industry. He said during the interview that he’s down to one credit card and $100,000 in the bank.
Pressed on whether he had been straight about FTX, Bankman-Fried said: “I was as truthful as I’m knowledgeable to be.”
Binance CEO, Zhao to Create $1bn for Purchase of Distressed Assets
According to an interview with Chief Executive Officer Changpeng Zhao, cryptocurrency exchange Binance wants to create a fund of about $1 billion for the potential purchase of distressed digital assets.
In an interview with Bloomberg, Zhao made a suggestion about possible funding increases. He said, “If that’s not enough, we can allocate more.”
The recovery fund Zhao’s business plans to set up to help cryptocurrency projects experiencing a liquidity crisis as a result of the failure of rival FTX has drawn a lot of interest from industry players, Zhao said last week while addressing a conference in Abu Dhabi.
Zhao stated he doesn’t have a precise number in mind for the size of the recovery fund while speaking at a conference in Abu Dhabi.
He declined to name other exchanges or institutions at this time, but said that there were “players that have strong financials and we should band together; we’ve got significant interest so far.”
Zhao stated that Binance has strong reserves, but he did not specify how much the business would contribute to the fund.
Zhao remarked that Crypto didn’t require saving. “Crypto will be fine.”
Zhao stated that more information about the fund will be made available over the following two weeks.
Investors King learned that earlier today, Binance’s Twitter account posted information about the launch of a new project and token sale by Binance Launchpad. Similarly to this, Binance has released information about the upcoming token sale for HOOK, the Hooked Protocol’s native cryptocurrency.
In the same manner, as with earlier projects that Binance has launched on its platform, the token sale will be conducted as a lottery. Participants’ BNB balances will be recorded starting at 0:00 UTC today and continuing until 0:00 UTC on December 1.
Snapshots of balances will be made on an hourly basis during that period of seven days.
The self-custody wallet NGRAVE has received a strategic investment from Binance, and the company will manage its Series A round. The largest exchange by volume has decided to capitalize on the growing demand for hardware wallets. After the recent failure of the important cryptocurrency exchange FTX, a rise has been noted.
FTX Confirms Owing its 50 Top Creditors $3.1 Billion
Foremost cryptocurrency exchange company, FTX, which filed for the United States (U.S) bankruptcy court protection, has revealed it owes its 50 biggest creditors nearly $3.1 billion.
FTX is a Bahamas-based cryptocurrency exchange. The exchange was founded in 2019 and, at its peak in 2021, had over one million users and was the third-largest crypto exchange across the globe by volume.
In the court filing made on Saturday 19th of November, 2022, the exchange corporation confirmed it owes its top ten creditors alone, around $1.45 billion – declining to mention their names.
Since 11 November 2022, FTX has been in bankruptcy proceedings in the US court system following a liquidity crisis.
FTX and its affiliates filed for bankruptcy in Delaware on November 11, in one of the highest-profile crypto deals, rendering almost 1 million customers, including other investors to face total losses in the billions of dollars.
FTX on Saturday assured it has launched a strategic review of its global assets; preparing the sale of some assets; and reorganization of some sister businesses. A hearing on FTX’s so-called first-day motions commenced on Tuesday 22nd of November 2022, before a U.S. bankruptcy judge in a separate court filing.
Investors King learnt the collapse of FTX impacted negatively on the cryptocurrency industry, by extension reducing the paper fortune of its 30-year-old founder, Sam Bankman-Fried, from more than $15 billion to almost nothing within days.
The sudden implosion of FTX prompted financial experts to clamour for a mechanism capable of bringing crypto within the regulatory framework.
Investment analyst, Jon Cunliffe, at an event organized by Warwick Business School said “While the crypto world is not at present large enough or interconnected enough with mainstream finance to threaten the stability of the financial system, its links with mainstream finance have been developing rapidly.”
Cunliffe warned “We should not wait until it is large and connected to develop the regulatory frameworks necessary to prevent a crypto shock that could have a much greater destabilising impact.”
FTX recently gained the support of top-notch investors such as Sequoia Capital; the world’s largest asset manager BlackRock; and a handful of known hedge fund managers. It also enjoyed celebrity endorsements American football star, Tom Brady, and comedian Larry David.
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