Sebastian Sinclair

NBA Hall of Famer Shaquille O’Neal has finally been served by lawyers representing investors in a class-action lawsuit against FTX celebrity endorsers.



O’Neal was handed official legal documents outside his Texas residence at 4pm local time on Sunday. Adam Moskowitz, managing partner and class-action co-counsel at The Moskowitz Law Firm, confirmed the serving to Blockworks in an email.



“The good news is his home video cameras recorded our service and we made it very clear that he is not to destroy and/or erase any of these security tapes because they must be preserved for our lawsuit,” he said.



As of last week, O’Neal was the last remaining defendant named in the suit to be served. O’Neal joins Tom Brady, Larry David, Gisele Bündchen, Stephen Curry and Kevin O’Leary, among others.



The development ends a three-month hunt to serve the former basketball superstar over his role in endorsing the <a href="https://blockworks.co/news/ftx-new-management-findings" target="_blank" rel="noreferrer noopener">now-defunct crypto exchange</a> FTX.



FTX pushed sweeping marketing campaigns, including Super Bowl ads, celebrity endorsements and naming rights to the Miami Heat’s arena. Some promotions reportedly promised investors greater returns than a typical deposit account.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">And oh yeah, 🏈 + <a href="https://twitter.com/SHAQ?ref_src=twsrc%5Etfw">@SHAQ</a> <a href="https://t.co/QlZpvMfnCp">pic.twitter.com/QlZpvMfnCp</a>&mdash; FTX (@FTX_Official) <a href="https://twitter.com/FTX_Official/status/1492368625830871040?ref_src=twsrc%5Etfw">February 12, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Shaquille O&#8217;Neal still lives on FTX&#8217;s Twitter timeline</figcaption></figure>



The lawsuit was filed by a retail investor on behalf of other FTX users who’d been influenced to use the platform by celebrities. O’Neal’s “FTX: I Am All In” commercial, cited by Garrison, was created by New York advertising agency Dentsu McGarrybowen and global partnership firm Wasserman.



FTX filed for bankruptcy last November following an $8-billion wave of withdrawals, which quickly led to allegations of severe mismanagement and fraud. Former CEO Sam Bankman-Fried has <a href="https://blockworks.co/news/sam-bankman-fried-issues-not-guilty-plea" target="_blank" rel="noreferrer noopener">pleaded not guilty</a> to federal charges and awaits trial later this year, while close associates have <a href="https://blockworks.co/news/ftx-alameda-execs-plead-guilty-to-fraud-released-on-bail" target="_blank" rel="noreferrer noopener">struck plea deals</a> to cooperate with the US government.



Lawyers had until Monday to hand over official legal documents to O’Neal after Judge Michael Moore, presiding, issued a deadline after denying a request to serve the <a href="https://blockworks.co/news/shaquille-oneal-ftx-lawsuit-not-served" target="_blank" rel="noreferrer noopener">celebrity via Twitter</a>.



“We took Judge Moore’s instructions very seriously and are glad to finally end this silly sideshow,” Moskowitz said. Blockworks attempted to contact O’Neal via his philanthropy website but did not immediately receive a response.



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Shaquille O’Neal Served in FTX Case, Ending 3-Month ‘Sideshow’

Australian investment platform Superhero and crypto exchange Swyftx have terminated a billion-dollar merger that would have created the country’s first digital assets “super app.”



Swyftx will sell Superhero back to its co-founders, John Winters and Wayne Baskin, alongside investors who had backed the app two years ago.



A tightening regulatory environment at home is being blamed for the demerger. Swyftx only one month ago insisted its deal with Superhero, <a href="https://blockworks.co/news/australian-crypto-exchange-swyftx-trading-app-superhero-reveal-1b-merger" target="_blank" rel="noreferrer noopener">struck in June</a>, would forge ahead <a href="https://www.afr.com/markets/currencies/swyftx-insists-capital-raise-isn-t-ftx-related-superhero-merger-on-track-20221123-p5c0l0" target="_blank" rel="noreferrer noopener">unabated</a>.



At the time, Swyftx sought to raise fresh capital to assist its integration with Superhero, which had yet to materialize due to “customer service concerns,” <a href="https://www.afr.com/technology/superhero-and-swyftx-walk-away-from-1-5b-merger-20221220-p5c7nv" target="_blank" rel="noreferrer noopener">Australian Financial Review</a> reported earlier this week.



The merger’s valuation — 1.5 billion Australian dollars ($2.2 billion) — had been based on various business fundamentals including past revenue and forecast revenue, signed off by both company boards.



The canceled deal comes amid a sensitive time for the crypto industry worldwide, wrecked by <a href="https://blockworks.co/news/bankman-fried-set-for-us-extradition-to-face-monster-indictment" target="_blank" rel="noreferrer noopener">alleged fraud at FTX</a>, the latest in a <a href="https://blockworks.co/news/ftx-not-worst-bad-thing-in-crypto-this-year" target="_blank" rel="noreferrer noopener">string of scandalous</a> blowups.



To prepare for a prolonged crypto winter, Swyftx axed some <a href="https://www.linkedin.com/posts/alex-harper-52640151_swyftx-announces-further-team-changes-activity-7005374577748979712-YVVz?utm_source=share&amp;utm_medium=member_ios">90 employees</a> at the beginning of the month, following up an initial cut of 74 staff in late August.



Earlier this month, a spokesperson for Swyftx told Blockworks that despite the layoffs the exchange had “no issues” with liquidity and was not at risk of insolvency.



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Australian Crypto ‘Super App’ Canned Along With $2.2B Merger

Sam Bankman-Fried’s $32 billion FTX empire is now bankrupt, sending markets crumbling — and the saga is far from over.



Ever since FTX failed to withstand a $6 billion bank run last week, the once mighty brand has gone down as one of the worst catastrophes in digital asset history.



But it was only six days ago that Binance CEO Changpeng Zhao had announced a plan to acquire FTX, a deal which would’ve seen the world’s top crypto exchange absorb its primary rival.



The timeline below tracks major events leading up to the FTX group filing for bankruptcy last Friday, along with more than 130 subsidiaries and adjacent businesses including trading unit Alameda Research.



<h3 class="wp-block-heading">Nov. 9 — Wednesday: From bad to worse</h3>



FTX sister firm Alameda Research’s website goes offline reading: “<a href="https://cms.blockworks.co/news/alameda-halts-trading-source-says/" target="_blank" rel="noreferrer noopener">This site is currently private</a>” as it halts trading with at least one regular counterparty, a Blockworks source says.



The SEC as well as the CFTC begin investigating whether FTX <a href="https://www.bloomberg.com/news/articles/2022-11-09/us-probes-ftx-empire-over-handling-of-client-funds-and-lending?leadSource=uverify%20wall" target="_blank" rel="noreferrer noopener">mishandled customer funds</a>.



Rival exchange Binance <a href="https://cms.blockworks.co/news/1-binance-ftx-deal-is-off-unless-ftx-us-is-part-of-the-package-source/" target="_blank" rel="noreferrer noopener">walks back</a> plans to acquire FTX following its “due diligence,” which determines the $8 billion balance sheet black hole isn’t worth it.



<h3 class="wp-block-heading">Nov. 10 — Thursday: FTX hunts for capital</h3>



Bankman-Fried, still FTX CEO, vows to plow ahead in search of <a href="https://cms.blockworks.co/news/sbf-commits-to-radical-transparency-as-ftx-seeks-investment-capital/" target="_blank" rel="noreferrer noopener">outside liquidity</a> to plug his leaking ship. He pledges “radical transparency” and a desire to make his customers whole.



He simultaneously announces Alameda is winding down operations on FTX. Later, Bankman-Fried tells his staff in a memo that he is <a href="https://www.reuters.com/technology/ftxs-bankman-fried-seeking-capital-raise-talked-justin-sun-memo-2022-11-10/" target="_blank" rel="noreferrer noopener">seeking a capital rescue package</a> worth some $9.4 billion from the likes of Tron’s Justin Sun and stablecoin issuer Tether, Reuters reported.



Tether freezes $46 million USDT held by FTX on the Tron blockchain following a request from law enforcement. Trading activity causes the stablecoin’s dollar peg to <a href="https://cms.blockworks.co/news/tether-freezes-ftx-usdt-as-dollar-peg-wobbles/" target="_blank" rel="noreferrer noopener">wobble</a> while chief technology officer Paolo Ardoino says cash redemptions are flowing smoothly.



<h3 class="wp-block-heading">Only FTX users in Bahamas allowed to withdraw</h3>



After FTX suspended digital asset withdrawals on Tuesday, on-chain data shows the exchange on Thursday processing some $7.2 million in requests by those residing in <a href="https://cms.blockworks.co/news/ftx-re-enables-withdrawals-but-only-in-bahamas/">The Bahamas</a>, where the firm is headquartered.&nbsp;



The restrictions on non-Bahamas users leads to some <a href="https://cms.blockworks.co/news/ftx-nfts-provided-loophole-for-non-bahamas-residents-wanting-to-withdraw-funds/" target="_blank" rel="noreferrer noopener">smuggling capital out</a> via peculiar NFT sales.&nbsp;



Bankman-Fried <a href="https://twitter.com/FTX_Official/status/1590783569471115264">claims</a> allowing Bahamas residents to withdraw while barring the rest of the world was in line with regulator requests. The Securities Commission of the Bahamas later denies that was the case.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Securities Commission Addresses FTX Statement on Bahamian Withdrawals <a href="https://t.co/OZKWwicSuN">pic.twitter.com/OZKWwicSuN</a>&mdash; Securities Commission of The Bahamas (@SCBgov_bs) <a href="https://twitter.com/SCBgov_bs/status/1591577646005379074?ref_src=twsrc%5Etfw">November 12, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The Wall Street Journal <a href="https://www.wsj.com/articles/ftx-tapped-into-customer-accounts-to-fund-risky-bets-setting-up-its-downfall-11668093732" target="_blank" rel="noreferrer noopener">reports</a> that Bankman-Fried tells staff during an investor note that Alameda owes FTX about $10 billion, apparently customer funds.



The Securities Commission of The Bahamas <a href="https://cms.blockworks.co/news/bahamas-regulator-freezes-ftx-assets/" target="_blank" rel="noreferrer noopener">freezes FTX’s assets</a> forcing local subsidiary FTX Digital Markets into what’s known as provisional liquidation. Its permit to operate in the Caribbean nation is terminated.



The US-regulated arm of FTX, FTX.US, says it could end up halting trading despite Bankman-Fried assuring customers the US entity is not financially impacted by “this shitshow.”



<h3 class="wp-block-heading">Nov. 11 — Friday: SBF resigns, FTX goes bankrupt</h3>



FTX and dozens of affiliated companies are declared bankrupt and seek chapter 11 protection in the federal court of Delaware. Bankman-Fried resigns.



International exchange FTX, FTX.US and Alameda are placed in the hands of veteran insolvency practitioner John J. Ray III, who replaces Bankman-Fried as FTX CEO. Ray handled Enron in the wake of its own bankruptcy reorganization.



With roughly 100,000 creditors, Bankman-Fried apologizes for the second time in a <a href="https://twitter.com/SBF_FTX/status/1591089320290816000?s=20&amp;t=3S87nQqxAhE83X_ksOHwdg" target="_blank" rel="noreferrer noopener">tweet thread</a> saying he was still “<a href="https://twitter.com/SBF_FTX/status/1591089330323611648?s=20&amp;t=3S87nQqxAhE83X_ksOHwdg" target="_blank" rel="noreferrer noopener">piecing together</a>” details and would provide a play-by-play update soon.



<h3 class="wp-block-heading">Nov. 12 — Saturday: FTX hacked for most of its remaining crypto</h3>



Blockchain analytics unit Elliptic <a href="https://hub.elliptic.co/analysis/477-million-moved-out-of-ftx-in-suspected-theft/" target="_blank" rel="noreferrer noopener">reports</a> $477 million in various tokens was stolen from FTX’s operational wallets on Saturday morning. FTX insiders seem to have saved $186 million from the attackers by moving the crypto into cold storage.



FTX insiders then share a message on Telegram: “FTX has been hacked, all funds seem to be gone. FTX apps are malware. Delete them. Chat is open. Don’t go on FTX site as it might download Trojans.”



FTX.US general counsel later confirms that unauthorized transactions took place. The firm is now coordinating with law enforcement. Kraken chief security officer says the company knows the identity of the assailant, as transaction fees for some of the illicit transactions were funded from a Kraken account.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">3/ An active fact review and mitigation exercise was initiated immediately in response.  We have been in contact with, and are coordinating with law enforcement and relevant regulators. (Statement from John Ray, Chief Restructuring Officer and CEO of <a href="https://twitter.com/FTX_Official?ref_src=twsrc%5Etfw">@FTX_Official</a>)&mdash; Ryne Miller (@_Ryne_Miller) <a href="https://twitter.com/_Ryne_Miller/status/1591495431179177989?ref_src=twsrc%5Etfw">November 12, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“Over $220 million of the tokens have been swapped for ETH or DAI through decentralized exchanges — a common tactic used by thieves seeking to avoid seizure of the stolen assets,” Elliptic wrote.



<h3 class="wp-block-heading">More details of FTX balance sheet emerge</h3>



Financial Times <a href="https://www.ft.com/content/f05fe9f8-ca0a-48d5-8ef2-7a4d813af558" target="_blank" rel="noreferrer noopener">reports</a> that just before FTX went bankrupt, the exchange’s primary balance sheet showed only $900 million in liquid, easy-to-sell assets against $9 billion in liabilities.



Of those liquid funds, Robinhood stock made up $470 million controlled by a Bankman-Fried entity not listed in the Friday bankruptcy filing. FTX also held $5.5 billion in “less liquid” crypto assets and $3.2 billion in illiquid equities.



Bankman-Fried <a href="https://cms.blockworks.co/news/ftxs-sam-bankman-fried-spots-opportunity-in-troubled-markets/" target="_blank" rel="noreferrer noopener">bought a 7.6% stake</a> in Robinhood in May and reportedly sought to offload the stock at around 20% discount on its current market value last week, at $9 per share (HOOD trades at $10 per share during pre-market Monday).



The second-biggest liquid asset on FTX Trading’s balance sheet was $200 million cash kept with Alameda-owned investment firm Ledger Prime, with no other US dollar balances. Notably, no bitcoin assets were listed despite maintaining $1.4 billion in bitcoin liabilities.



<h3 class="wp-block-heading">Nov. 13 — Sunday: Bahamian police investigate FTX</h3>



Bahamian authorities say they’ve begun working with the nation’s securities regulator to investigate potential <a href="https://www.bloomberg.com/news/articles/2022-11-13/ftx-faces-criminal-misconduct-probe-by-bahamas-authorities?leadSource=uverify%20wall">criminal misconduct</a>.&nbsp;



Reuters had <a href="https://www.reuters.com/markets/currencies/exclusive-least-1-billion-client-funds-missing-failed-crypto-firm-ftx-sources-2022-11-12/" target="_blank" rel="noreferrer noopener">reported</a> on Saturday that Bankman-Fried previously sent $10 billion in customer funds from FTX to Alameda, with between $1 billion and $2 billion now totally missing.



The outlet, citing sources familiar, alleged FTX chief technology officer Gary Wang built a backdoor that allowed him to siphon funds from FTX without setting off in-built alarms.



Bankman-Fried later said he &#8220;disagreed with the characterization&#8221; of the multi-billion dollar transfer and blamed a “confusing internal labeling” which was misread without elaborating on the details, per the report.



Sam Bankman-Fried, Alameda, FTX, FTX.US did not immediately respond to requests for comment. Bankman-Fried responded to Reuters’ questions about the missing funds with “???”.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">2) H&mdash; SBF (@SBF_FTX) <a href="https://twitter.com/SBF_FTX/status/1592001631079497728?ref_src=twsrc%5Etfw">November 14, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption>Twitter is awash with Bankman-Fried memes following this set of seemingly unfinished tweets posted Monday.</figcaption></figure>



David Canellis contributed reporting.



Updated Nov. 29, 2022 at 12:21 am ET: FTX chief technology officer Gary Wang allegedly built the backdoor from FTX to Alameda, not Bankman-Fried as originally reported.



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FTX Bankrupt, Hacked, Investigated: A Timeline of Events

Shalini Nagarajan

The meltdown of crypto exchange FTX is heavily impacting markets — but on a more personal level, employees who believed they worked for one of the most credible crypto platforms are reeling.



Zane Tackett, who was FTX’s head of institutional sales, resigned from the firm on Tuesday, but wanted to stay and help out where he could. But he was quickly booted from work platforms without warning.



&#8220;Went to check slack and noticed my account was deactivated. No heads up or anything, just suddenly lost access. Gmail and shit deactivated too. Was a pretty damn good [two] and a half years outside of the last week,&#8221; he <a href="https://twitter.com/tackettzane/status/1590836780731109377" target="_blank" rel="noreferrer noopener">tweeted</a>.



Tackett held most of his crypto assets on exchange at FTX and claims he “lost a lot of money.” He didn’t specify exactly how much is still stuck there, just that he was down around 80%.



Although, he <a href="https://twitter.com/tackettzane/status/1590792225306206209" target="_blank" rel="noreferrer noopener">tweeted</a> that he&#8217;d foolishly sent an additional $700,000 to FTX before the exchange paused withdrawals. Now, like most of its users, he isn’t sure if he’ll get it back.



“I had no idea we were in trouble before Sam&#8217;s tweet,” he told Blockworks in a message. When asked whether Bankman-Fried was saying or doing anything to reassure employees, Tackett said: “He&#8217;s not.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">same thing happened to employees. most of us kept significant portions of our net worth there. i&#39;m down ~80% from this&mdash; Zane Tackett (@tackettzane) <a href="https://twitter.com/tackettzane/status/1590878753835880448?ref_src=twsrc%5Etfw">November 11, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The former executive, who said he <a href="https://twitter.com/tackettzane/status/1590870555527630848">worked 17-hour days</a>, added that others were more heavily <a href="https://twitter.com/tackettzane/status/1590925063062441985" target="_blank" rel="noreferrer noopener">impacted</a>, many of them FTX employees who kept &#8220;significant portions&#8221; of their net worths on the platform.



Tackett informed VIP clients of his resignation this week, according to a <a href="https://twitter.com/AutismCapital/status/1590923422594629632/photo/1" target="_blank" rel="noreferrer noopener">message</a> seen on Twitter. “We were assured in Slack channels from execs that FTX was solvent, had enough funds to cover customers assets plus additional funds in reserve, and that everything was all fine,” he tweeted.



FTX overnight <a href="https://cms.blockworks.co/news/ftx-re-enables-withdrawals-but-only-in-bahamas/" target="_blank" rel="noreferrer noopener">opened up withdrawals</a> for accounts belonging to residents of the Bahamas, where the firm is headquartered. It&#8217;s unclear exactly how many FTX staff reside there, and the company didn’t return Blockworks’ request for comment by press time.



<h3 class="wp-block-heading">FTX exchange collapse threatens effective altruists</h3>



The derivatives exchange had boasted a philanthropic arm called the Future Fund, which handed out grants and investments directed at serving future generations. But its members have now quit.



“We are now unable to perform our work or process grants, and we have fundamental questions about the legitimacy and integrity of the business operations that were funding the FTX Foundation and the Future Fund,” they wrote in a <a href="https://forum.effectivealtruism.org/posts/xafpj3on76uRDoBja/the-ftx-future-fund-team-has-resigned-1" target="_blank" rel="noreferrer noopener">post</a> dated Nov. 11. “As a result, we resigned earlier today.”



Among members who resigned was Will MacAksill, an influential figure in the effective altruism movement and Bankman-Fried associate, who <a href="https://cms.blockworks.co/news/sam-bankman-fried-elon-musk-weighed-joint-effort-to-acquire-twitter/" target="_blank" rel="noreferrer noopener">tried to set up a meeting</a> between the FTX CEO and Elon Musk for a “joint effort” to acquire Twitter.



They added it’s unlikely the fund will be able to execute commitments to grants already made. As of June this year, the fund invested <a href="https://ftxfuturefund.org/future-fund-june-2022-update/" target="_blank" rel="noreferrer noopener">$132 million</a> across 262 grants and investments.&nbsp;&nbsp;



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FTX Staff Lost ‘Significant Portions’ of Net Worth on Exchange

<div id="highlights-block_634543bf12eb1" class="highlights">
 <ul>
 <li>Coinbase is one step closer to being fully in line with Singapore regulations enacted in 2020</li>
 <li>The city-state has long been viewed as a hub for crypto innovation despite strict rules</li>
 </ul>
 
</div>



Crypto exchange Coinbase has secured in-principle approval for a digital asset license from the central bank of Singapore, part of its journey to becoming fully-regulated in the country.



While Coinbase has been <a href="https://techcrunch.com/2015/09/02/coinbase-expands-to-singapore" target="_blank" rel="noreferrer noopener">operating</a> in Singapore since 2015, the Monetary Authority of Singapore (MAS) has now granted Coinbase conditional approval under the Payment Services Act (PSA).



In January 2020, the PSA came into effect which strengthened regulatory requirements for various payment services provided in the city-state, including electronic payments and crypto-related exchange services.



Viewed by the company as a major milestone, Hassan Ahmed, Coinbase&#8217;s regional director for Southeast Asia, said the exchange is seeking to expand further across Singapore, which it views as a “strategic market and global hub” for Web3 innovation, <a href="https://www.reuters.com/technology/crypto-giant-coinbase-gets-singapore-licence-2022-10-11/?rpc=401&amp;" target="_blank" rel="noreferrer noopener">Reuters reported</a>.



Coinbase Singapore — which has roughly 100 employees — had been part of a list of 54 other entities granted exemption from licensure for providing digital payment token services, allowing the firm to continue operating until receiving its provisional nod.



Subject to ongoing discussion and ratification by MAS, the in-principle approval is similar to holding a full license, allowing the exchange to legally offer its services to customers including institutional types.



The Singapore offshoot of the exchange now joins a list of 17 entities that have received in-principle approval including <a href="https://cms.blockworks.co/https-blockworks-co-crypto-com_receives_approval/" target="_blank" rel="noreferrer noopener">Crypto.com</a> in June as well as Paxos in March. 



More than 160 entities are currently awaiting approval as Digital Payment Tokens under the PSA, while a further 100 have been rejected outright.&nbsp;



Only <a href="https://eservices.mas.gov.sg/fid/institution?sector=Payments&amp;category=Major%20Payment%20Institution&amp;activity=Digital%20Payment%20Token%20Service" target="_blank" rel="noreferrer noopener">seven entities</a> have received a digital payment token license from MAS with the first being granted to Singapore-based fintech FOMO Pay last year. Australian exchange Independent Reserve and DBS’s brokerage arm followed shortly after in October of the same year.



Singapore is often simultaneously praised as both a region for fintech innovation and stringent regulatory frameworks for digital assets.



In April, local regulators <a href="https://cms.blockworks.co/singapore-crypto-firms-operating-abroad-must-now-be-licensed-under-new-law/" target="_blank" rel="noreferrer noopener">closed a loophole</a> that had allowed domestically registered virtual asset service providers operating abroad to offer their services outside its jurisdiction.



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Coinbase Secures Crypto Payments License in Singapore

<div id="highlights-block_6345322debfa0" class="highlights">
 <ul>
 <li>Crypto.com says human error resulted in a user being sent millions of dollars instead of less than $100</li>
 <li>The user has pleaded not guilty to dealing with proceeds of crime and theft from her local bank over the incident</li>
 </ul>
 
</div>



Crypto.com has blamed mistakenly sending millions of dollars in digital assets to an Australian user on manual processes and an Excel spreadsheet.



An Australian court has heard how a Crypto.com employee located in Bulgaria had entered incorrect numbers into the spreadsheet, according to local <a href="https://indaily.com.au/news/2022/10/11/melbourne-couple-on-trial-for-spending-mistake-10m-payment/" target="_blank" rel="noreferrer noopener">news report</a>, which ultimately resulted in the user receiving $6.6 million (10.5 million Australian dollars) instead of $64.



Melburnian Thevamanogari Manivel received the funds in May 2021. Manivel allegedly later spent the money to buy art, furniture and four luxury homes, including a multi-million dollar mansion in Cragieburn. She’s also said to have sent millions of dollars to Malaysian bank accounts.



The Singapore-headquartered exchange took the matter to the Victorian supreme court this year and was granted a freeze on Manivel’s assets in February after failing to notice the missing millions until seven months later, following an end-of-year audit.



Crypto.com compliance officer Michi Chan Fores told the Melbourne Magistrates Court on Tuesday the first part of the refund process had been due to a human error relating to records kept in Excel.



An Australian payment provider for Crypto.com picked up the refund request, transferring the millions into Manivel&#8217;s local bank account.&nbsp;



Interestingly, Manivel may have received the funds because her partner had used her bank card to make crypto purchases through his own Crypto.com account, according to reports.



<h3 class="wp-block-heading">Crypto.com user granted bail after spending six months in jail</h3>



Manivel was arrested at the Melbourne airport in March while allegedly attempting to head back to Malaysia with about $6,800 (11,000 Australian dollars) in cash.



Appearing in court by video link from jail on Tuesday, Manivel and Singh said they believed they had won the funds via a competition.



Manivel had reportedly been in custody for six months following her arrest but has now been granted $6,300 bail on strict conditions; She must surrender her passport and stay away from any points of departure.



Fores denied the exchange had undertaken any such competition and no customer had received notifications relating to the alleged competition. 



Most of the funds have been returned, with $1.9 million outstanding. A civil action has frozen the remaining funds and moved to retrieve gifted cash from Manivel&#8217;s relatives.



Manivel has pleaded not guilty to three charges, including dealing with proceeds of crime and theft from her local bank for withdrawing the money. The pair are now reportedly awaiting a directions hearing scheduled for November 8.



Taking Crypto.com’s story as fact, this wouldn’t be the first time a prominent crypto company has mistakenly sent outsized payments to users.&nbsp;



Last year, staff at <a href="https://cms.blockworks.co/crypto-com-sues-user-after-refunding-10m-instead-of-100/" target="_blank" rel="noreferrer noopener">crypto lender BlockFi</a> accidentally distributed promotional payouts in bitcoin instead of dollar-pegged stablecoin GUSD, with some users receiving millions of dollars in crypto rather than hundreds.



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Crypto.com Sent User $6.6M Due to Excel Bungle, Court Hears

<div id="highlights-block_6343e236024d3" class="highlights">
 <ul>
 <li>Tron founder Justin Sun is reportedly the core investor of About Capital, which just bought Huobi</li>
 <li>Huobi founder Leon Li had been shopping his stake for more than a year</li>
 </ul>
 
</div>



Huobi Global’s majority shareholder Leon Li has agreed to sell his entire stake in the crypto exchange to Hong Kong-based investment firm About Capital, reportedly spearheaded by Tron founder Justin Sun.



About Capital’s buyout arm will control Li’s stake upon completion of the transaction, the company said in a <a href="https://www.huobi.com/support/en-us/detail/84919491689932" target="_blank" rel="noreferrer noopener">statement</a> on Saturday. Li will no longer be involved in Huobi’s operations. Terms of the deal were not disclosed.



Huobi is one of the world’s largest crypto trading platforms, with analytics unit <a href="https://messari.io/exchanges" target="_blank" rel="noreferrer noopener">Messari</a> ranking the exchange eighth by total volume having processed nearly $111 million in trades over the past 24 hours.



China-based journalist Colin Wu <a href="https://wublock.substack.com/p/exclusive-the-real-buyer-of-huobi" target="_blank" rel="noreferrer noopener">reported</a> on Monday that Tron founder Justin Sun is the core investor in About Capital, implying that he is the real buyer of the stake (which the report pegged at $1 billion).&nbsp;



The <a href="https://www.theverge.com/c/22947663/justin-sun-tron-cryptocurrency-poloniex" target="_blank" rel="noreferrer noopener">controversial</a> crypto <a href="https://cms.blockworks.co/justin-suns-plot-to-divide-ethereum-off-to-rocky-start/" target="_blank" rel="noreferrer noopener">entrepreneur</a> told Wu that he didn&#8217;t participate and later <a href="https://www.theblock.co/post/175867/justin-sun-denies-being-real-buyer-of-huobi-stake-sale-exclusive" target="_blank" rel="noreferrer noopener">reiterated</a> his denial to The Block. Still, he&#8217;s now officially one of <a href="https://www.huobi.com/support/en-us/detail/34919663373190" target="_blank" rel="noreferrer noopener">Huobi’s global advisors</a>, alongside Valkyrie Investment CEO Leah Wald and About Capital founder Ted Chen. Sun has even updated his Twitter bio to reflect his new Huobi title.



Aside from Hong Kong-based fund manager About Capital, Chen also founded China’s hedge fund giant Greenwoods Asset Management.&nbsp;



Sun is said to have been present at Huobi’s event site at the recent TOKEN2049 conference in Singapore. 



Huobi Global is headquartered in Seychelles, according to the company’s <a href="https://www.hb.co.kr/en-us/about/" target="_blank" rel="noreferrer noopener">Korean website</a>. But its regional affiliates appear to have bases in different locations, with Singapore serving as the firm&#8217;s Asian headquarters. 



Huobi says it&#8217;s seeking a new base in Europe, after <a href="https://www.prnewswire.com/news-releases/huobi-begins-migrating-spot-trading-services-to-regulated-entity-in-gibraltar-reflecting-global-commitment-to-compliant-growth-301418248.html" target="_blank" rel="noreferrer noopener">moving</a> its spot trading operations to a subsidiary registered in Gibraltar last November. A Huobi spokesperson wasn&#8217;t immediately available to comment on the matter.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">I am very honored to be appointed as a member of the Global Advisory Board of <a href="https://twitter.com/HuobiGlobal?ref_src=twsrc%5Etfw">@HuobiGlobal</a> and work with industry, academic, and policy leaders to help guide and grow this innovative, vibrant, and resilient organization in its latest chapter of global expansion. Full sail ahead. <a href="https://t.co/txZspJaV4Q">https://t.co/txZspJaV4Q</a>&mdash; H.E. Justin Sun🌞🇬🇩 (@justinsuntron) <a href="https://twitter.com/justinsuntron/status/1579186183871287296?ref_src=twsrc%5Etfw">October 9, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In any case, Huobi says the deal has no impact on its core operations and business management team, but says it will now take on international brand promotion and business expansion projects. That includes the appointment of its new global strategic advisory board, on which Sun now sits.



This isn&#8217;t Sun&#8217;s first foray into crypto exchanges. As part of a different investment group, Sun previously <a href="https://www.coindesk.com/markets/2019/11/12/despite-denials-tron-founder-confirms-investment-in-poloniex-crypto-exchange/" target="_blank" rel="noreferrer noopener">acquired</a> crypto exchange Poloniex in 2019 from stablecoin issuer Circle. He initially denied the buyout.



<h3 class="wp-block-heading">Huobi founder shopped stake long before Justin Sun&#8217;s reported buyout</h3>



During his time as chief, Li would reportedly hand over daily management responsibilities to his deputies for short periods to deal with health-related issues.&nbsp;



The company <a href="https://www.huobi.com/support/en-us/detail/54886961978434" target="_blank" rel="noreferrer noopener">gradually exited</a> its key market of China beginning in September 2021 following Beijing’s crypto ban. Because of the subsequent drop in revenue, Huobi was forced to start slashing 30% of its workforce this year, Wu <a href="https://twitter.com/WuBlockchain/status/1541683658817699842" target="_blank" rel="noreferrer noopener">reported</a>.



It has since spurred expansion in other markets, including Brazil and Turkey, but competitors such as Binance, FTX and OKCoin place higher on the basis of <a href="https://www.coingecko.com/en/exchanges" target="_blank" rel="noreferrer noopener">“Trust Score” rankings</a> on CoinGecko.



Li, the founder and CEO of Huobi Global, had been in talks with investors to sell his majority stake in the exchange for a while now. Bloomberg reported in August that he was only looking to <a href="https://cms.blockworks.co/crypto-moguls-compete-for-huobi-majority-stake-report/" target="_blank" rel="noreferrer noopener">sell 60% of his stake</a>, aiming for a company valuation of between $2 billion to $3 billion.&nbsp;



FTX founder Sam Bankman-Fried and Sun were reportedly among potential investors who discussed the stake sale with Li. But Bankman-Fried denied the rumors, saying FTX was not planning to acquire the exchange.



Sun didn’t return Blockworks’ request for comment by press time.



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Huobi Founder Sells 100% Stake to Justin Sun Fund: Report

Ben Strack

<div id="highlights-block_632c1c21cd1b3" class="highlights">
 <ul>
 <li>Advisors include the ex-head of the French Treasury, the former president of the Central Bank of Brazil and a member of the UK House of Lords</li>
 <li>The board’s creation comes as the US and other governments continue mulling crypto regulation</li>
 </ul>
 
</div>



Binance has created an advisory board led by a former US senator to help the crypto exchange navigate some of the most pressing regulatory issues facing the space. 



Max Baucus, an ex-Democratic senator from Montana who was US ambassador to China, is chair of the new group, the company revealed Thursday. The advisory board recently convened in Paris.



&#8220;Of all the technologies with the potential to create positive disruption, the world of crypto, blockchain, and Web3 is among the most exciting and the most promising,&#8221; Baucus said in a statement. 



&#8220;That&#8217;s why it is a great pleasure to participate in setting up the Binance Global Advisory Board, and bringing the group&#8217;s unrivaled collective expertise to bear in solving complex problems with a socially positive outcome.&#8221;



Baucus was first elected to the Senate in 1978 and went on to become Montana’s longest serving senator. He was chair of the Committee on Finance during his fifth term and left office in 2014. He was nominated by President Barack Obama that same year to be America’s ambassador to China, a role he held until January 2017.



<a href="https://www.linkedin.com/in/david-plouffe-00662396/details/experience/" target="_blank" rel="noreferrer noopener">David Plouffe</a>, a former senior advisor to President Obama, will also be on the board as a US representative. Other members reside in Nigeria, Korea, France, South Africa, Brazil, Mexico and Germany.



These advisors include:



<ul><li><a href="https://www.linkedin.com/in/ibukun-awosika-6b85a33/?originalSubdomain=ng" target="_blank" rel="noreferrer noopener">Ibukun Awosika</a>, former chair of the First Bank of Nigeria and founder of the Chair Centre Group; </li><li>Hyung-Rin Bang, advisor of the Korea Presidential Committee; </li><li><a href="https://www.linkedin.com/in/bruno-bezard-596b7b121/" target="_blank" rel="noreferrer noopener">Bruno Bézard</a>, managing partner at Cathay Capital, former economic advisor to the French Prime Minister and ex-head of the French Treasury; </li><li>Henrique de Campos Meirelles, former president of the Central Bank of Brazil; </li><li><a href="https://www.ndb.int/leslie-maasdorp/" target="_blank" rel="noreferrer noopener">Leslie Maasdorp</a>, chief financial officer of the New Development Bank; </li><li><a href="https://www.linkedin.com/in/adalberto-palma-0756342/details/experience/" target="_blank" rel="noreferrer noopener">Adalberto Palma</a>, former senior advisor to the President of Mexico; </li><li><a href="https://www.linkedin.com/in/christinschaefer/?originalSubdomain=de" target="_blank" rel="noreferrer noopener">Christin Schäfer</a>, founder of acs plus</li><li><a href="https://www.linkedin.com/in/ed-vaizey-603206a3/" target="_blank" rel="noreferrer noopener">Ed Vaizey</a>, a member of the UK House of Lords;</li><li>David Wright, chair of Eurofi</li></ul>



&#8220;We&#8217;re supercharging our ability to manage regulatory complexity by tapping into the highest level of expertise available anywhere in the world,” Binance CEO Changpeng Zhao said in a statement. 



“This collaboration between Binance and the leading experts of the [global advisory board] is a testament to our focus on compliance, transparency and ensuring a collaborative relationship with the world’s regulators as they develop sensible regulations worldwide.”



The creation of the new regulation-focused board comes as governments continue to mull how to regulate the crypto industry. The White House <a href="https://cms.blockworks.co/white-houses-latest-crypto-framework-lacks-clarity-some-say/" target="_blank" rel="noreferrer noopener">published its first crypto “framework”</a> last week about six months after President Joe Biden <a href="https://cms.blockworks.co/bidens-crypto-executive-order-may-be-watershed-moment-despite-lack-of-specifics/" target="_blank" rel="noreferrer noopener">issued an executive order</a> focused on ensuring the responsible development of digital assets.



<a href="https://cms.blockworks.co/binance-under-investigation-over-bank-secrecy-act-report/" target="_blank" rel="noreferrer noopener">Reuters reported earlier this month</a> that US authorities were investigating whether Binance violated the Bank Secrecy Act. A spokesperson told Blockworks at the time that the company is regularly in contact with regulators to answer questions they might have. 



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Former US Senator Will Chair New Binance Global Advisory Board

<div id="highlights-block_6310eb2e34efd" class="highlights">
 <ul>
 <li>The Bank Secrecy Act is mostly concerned with anti-money laundering controls</li>
 <li>“We work with agencies regularly to address any outstanding questions,” Binance spokesperson said</li>
 </ul>
 
</div>



US authorities have an ongoing investigation into whether Binance violated the Bank Secrecy Act, Reuters <a href="https://www.reuters.com/technology/exclusive-us-sought-records-binance-ceo-crypto-money-laundering-probe-2022-09-01/?rpc=401&amp;" target="_blank" rel="noreferrer noopener">reported</a> Thursday, after federal prosecutors began probing the company and its CEO in December 2020.



The Justice Department’s money laundering unit asked the world’s largest crypto exchange nearly two years ago to hand over messages from CEO Changpeng Zhao and other executives on matters including its detection of illegal transactions and US customer recruitment, according to the report.&nbsp;



The 2020 letter reportedly made nearly 30 requests for documents that included details of Binance’s policies to combat illegal finance, or reports of suspicious financial activity it had filed to authorities, among other matters.



The <a href="https://www.occ.treas.gov/topics/supervision-and-examination/bsa/index-bsa.html" target="_blank" rel="noreferrer noopener">Bank Secrecy Act</a>, passed in 1970, established program, recordkeeping and reporting requirements for national banks, federal savings associations, federal branches and agencies of foreign banks, particularly around combating money laundering.&nbsp;



Crypto exchanges fall under the scope of the Bank Secrecy Act too. Though Binance.US registered with the US Treasury Department in 2019, Binance’s flagship platform did not, according to Reuters.



A Binance spokesperson told Blockworks in an email that the company has a global security and compliance team with more than 500 people, including former regulators and law enforcement agents.



​​&#8221;As has been well documented, regulators across the globe are reaching out to every major crypto exchange to better understand our industry,” the representative added. “We work with agencies regularly to address any outstanding questions.”



The spokesperson did not comment on whether it is being investigated for violating the Bank Secrecy Act.



<h3 class="wp-block-heading">Crypto exchange execs already stung by Bank Secrecy Act</h3>



While Binance is reportedly deals with its own Bank Secrecy Act investigation, prominent executives at crypto derivatives exchange <a href="https://cms.blockworks.co/bitmex-founders-hayes-delo-plead-guilty-to-violating-us-bank-secrecy-act/" target="_blank" rel="noreferrer noopener">BitMEX</a> have already been sentenced for violations.



BitMEX co-founders Arthur Hayes and Ben Delo <a href="https://cms.blockworks.co/bitmex-founders-hayes-delo-plead-guilty-to-violating-us-bank-secrecy-act/" target="_blank" rel="noreferrer noopener">pleaded guilty</a> in February. As part of the plea agreement, the pair was ordered to pay $10 million each for their involvement in “willfully failing” to implement and maintain anti-money laundering measures at BitMEX. 



Another co-founder, Samuel Reed, <a href="https://www.justice.gov/usao-sdny/pr/third-founder-cryptocurrency-exchange-pleads-guilty-bank-secrecy-act-violations" target="_blank" rel="noreferrer noopener">pleaded guilty</a> to the same count the following month and also agreed to pay $10 million. Earlier this month, BitMEX&#8217;s head of business development Gregory Dwyer <a href="https://cms.blockworks.co/first-bitmex-employee-pleads-guilty-instead-as-co-founders-avoid-prison/" target="_blank" rel="noreferrer noopener">pleaded guilty</a> to violating the Bank Secrecy Act in a similar manner. He agreed to pay a $150,000 fine and faces up to five years in prison.&nbsp;



Hayes was sentenced to six months of house arrest followed by two years of probation; Delo received 30 months probation; and Reed was sentenced to 18 months probation. &nbsp;



<a href="https://cms.blockworks.co/crypto-industry-eyes-secs-regulation-by-enforcement-ramp-up/" target="_blank" rel="noreferrer noopener">Regulation by enforcement will continue</a> in the absence of concrete crypto legal frameworks, industry executives and lawyers have told Blockworks.



The Reuters report came two days after US Rep. Raja Krishnamoorthi, D-Ill., <a href="https://oversight.house.gov/news/press-releases/chairman-krishnamoorthi-requests-information-from-federal-agencies-and-crypto" target="_blank" rel="noreferrer noopener">sent letters</a> to four federal agencies and five crypto exchanges — including Binance — <a href="https://cms.blockworks.co/lawmakers-probe-coinbase-binance-ftx-over-crypto-fraud/" target="_blank" rel="noreferrer noopener">requesting information</a> on their mechanisms to tackle fraud and scams.



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Binance Under Investigation Over Bank Secrecy Act: Report

<div id="highlights-block_630dfd0ac2c36" class="highlights">
 <ul>
 <li>Two sisters in Melbourne reportedly used the erroneous AU$10 million ($6.6 million) to buy a luxurious mansion</li>
 <li>A judge has ordered the property be sold and the funds returned to Crypto.com</li>
 </ul>
 
</div>



Exchange <a href="https://cms.blockworks.co/tag/cryptocom/" target="_blank" rel="noreferrer noopener">platform</a> Crypto.com is reeling from an expensive mistake after accidentally refunding an Australian woman an amount way higher than she expected.&nbsp;



The woman, based in Melbourne, sought a AU$100 ($66) refund from the exchange in May last year, but received AU$10 million ($6.6 million), Daily Mail <a href="https://www.dailymail.co.uk/news/article-11158707/Crypto-platform-advertised-Matt-Damon-mistakenly-transferred-10million-Melbourne-woman.html" target="_blank" rel="noreferrer noopener">reported</a>.



Crypto.com didn’t realize the error until seven months later, during an end-of-year audit, according to the outlet.&nbsp;



The Singapore-headquartered exchange legally pursued the user to recover the money, informing the court that the blunder happened because an account number was entered the payment field, instead of the initially requested amount, the report said.



But by the time Crypto.com realized what happened, the cash had already gone towards a multi-million dollar mansion in the Melbourne suburb of Craigieburn, complete with a home cinema and gym.



The women are not getting away easily. A judge has now reportedly ordered their property be sold and for the exchange’s money to be paid back.



Crypto.com will likely win in court as it’s a well-established company, but this will serve as a cautionary tale for other companies, according to Alexander Tkachenko, CEO of asset tokenization platform VNX.



“While random errors occur on most platforms, this one is too costly to ignore,” he told Blockworks. Representatives for Crypto.com didn’t return request for comment by press time.&nbsp;



Crypto.com was founded in 2016 in Hong Kong and counts over 50 million active users, according to the company. 



The fiasco echoes a similar event that took place around the same time last year.



Crypto lender BlockFi mistakenly deposited bitcoin worth millions of dollars to a number of user accounts in May 2021, when the asset traded around $49,000.&nbsp;



Staff had accidentally processed payments in BTC rather than stablecoin GUSD. In a <a href="https://twitter.com/BlockFi/status/1393372759758082049?s=20">tweet</a>, BlockFi said some clients who participated in a trading promotion would see inaccurate bonus payments.&nbsp;



CEO Zac Prince said the firm <a href="https://twitter.com/blockfizac/status/1394968843320180738">sent</a> a “couple hundred” in bitcoin to less than 100 users. <a href="https://markets.businessinsider.com/currencies/news/blockfi-crypto-lender-bitcoin-accidentally-depositing-users-btc-promotion-2021-5-1030448422" target="_blank" rel="noreferrer noopener">Reports</a> of legal threats to the recipients later surfaced.



Article updated to correct intended stablecoin in BlockFi&#8217;s erroneous payments. 



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Crypto.com Sues User After Refunding $10M Instead of $100

<div id="highlights-block_62f4d375661c1" class="highlights">
 <ul>
 <li>Hotbit says some of its senior managers were subpoenaed in July over an alleged criminal matter</li>
 <li> The exchange expects to resume trade once frozen funds are returned but it&#8217;s unknown when that will be, if at all</li>
 </ul>
 
</div>



Cryptocurrency exchange Hotbit has suspended trading, deposits and withdrawals after authorities froze some of its funds over a suspected violation of criminal law.&nbsp;



The move to suspend services came after allegations that a former manager, who Hotbit said left in April, was involved in activities that went “against Hotbit’s internal principles,” the company said in a <a href="https://hotbit.zendesk.com/hc/en-us/articles/8074249353495" target="_blank" rel="noreferrer noopener">statement</a> on Wednesday.&nbsp;



Some of the platform’s senior managers were subpoenaed late last month and are cooperating with the agency’s investigation, it added.



Hotbit didn’t mention which jurisdictional agency is investigating its managers, or the total value of the frozen funds, although it appears unlikely to be from the US. 



The company’s <a href="https://www.hotbit.io/support?page=aboutUs" target="_blank" rel="noreferrer noopener">about</a> page says it’s registered to both Estonia and Hong Kong while its based in Shanghai and Taipei. CB Insights <a href="https://www.cbinsights.com/investor/hotbit" target="_blank" rel="noreferrer noopener">lists</a> Hotbit’s headquarters in Hong Kong while <a href="https://www.crunchbase.com/organization/hotbit" target="_blank" rel="noreferrer noopener">Crunchbase</a> reports Beijing.&nbsp;



Hotbit didn’t return Blockworks’ request for comment on its trade suspension and confirmation of where it’s headquartered by press time.



It expects to resume services once assets are unfrozen, but the firm isn’t sure when that will be. Hotbit, a smaller exchange relative to the likes of Binance and Coinbase, reported $350 million in trade volume over the past day, per <a href="https://coinmarketcap.com/exchanges/hotbit/" target="_blank" rel="noreferrer noopener">CoinMarketCap</a>.



The company claims other employees of Hotbit’s management, and the platform itself, were not involved in the alleged illicit activities under investigation.



“We are still actively cooperating with the law enforcement authorities in their investigations and are continuously communicating with them through our lawyers and applying for the release of the frozen assets,” Hotbit said in its announcement. “The assets of all users are safe on Hotbit.”



Unfulfilled open orders on the platform will be invalidated before services resume in order to prevent possible losses, and all leveraged ETF positions will be forcefully liquidated.



Founded in 2018, Hotbit says it has more than one million users from 170 countries. The firm’s core team members are from the US, China and Taiwan, and over 90% of its users are non-Chinese, according to its <a href="https://www.hotbit.io/support?page=aboutUs" target="_blank" rel="noreferrer noopener">website</a>. 



Last year, the platform suspended services for about a week after a <a href="https://hotbit.zendesk.com/hc/en-us/articles/1500008915521-" target="_blank" rel="noreferrer noopener">cyberattack</a> took down many of its services. The attackers also attempted to take control of the exchange’s wallets.



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cryptocurrency exchange