Massachusetts-Based Bankprov to End Loan Offerings Secured by Cryptocurrency Mining Rigs

The Amesbury, Massachusetts-based Bankprov, a subsidiary of Provident Bancorp, has announced that it will no longer provide loans secured by cryptocurrency mining rigs. In a filing with the U.S. Securities and Exchange Commission (EX-99.1), Bankprov stated that revenue from its digital asset loan portfolio will continue to decrease as the company has discontinued new loan originations backed by mining equipment.

Bankprov’s Portfolio of Cryptocurrency Collateralized Loans Decreased by 65%

Bankprov disclosed that it holds approximately $41.2 million in cryptocurrency-collateralized loans, with about $26.7 million of the debt backed by crypto-mining equipment. Collateralized loans secured by application-specific integrated circuit (ASIC) mining rigs became a popular investment vehicle in 2021, but the crypto winter resulted in significant pressure on the industry. By the end of June 2022, Luxor executive Ethan Vera estimated that about $4 billion in loans backed by mining machines were under financial strain.

Since then, several crypto-mining companies have either sought bankruptcy protection or reorganized tens of millions in debt. For example, at the end of September 2022, the bitcoin mining firm Compute North filed for bankruptcy. Two months later, Core Scientific also filed for bankruptcy. Other mining operations are attempting to restructure debt. Greenidge Generation announced Tuesday that it has reorganized $11 million in debt with B. Riley.

Bankprov stated that it repossessed ASIC mining equipment from undisclosed crypto-mining operations in September. “Our digital asset loan portfolio declined by $79.3 million, or 65.8%, largely due to paydowns on outstanding lines of credit, the partial charge-off, and repossession of cryptocurrency mining rigs in exchange for forgiving a $27.4 million loan relationship,” according to Bankprov’s filing.

The financial institution’s EX-99.1 earnings filing added:

The portfolio of loans secured by cryptocurrency mining rigs will continue to decline as the Bank is no longer originating this type of loan.

Another crypto-friendly financial institution, Metropolitan Commercial Bank, announced during the second week of January 2023 that it plans to “exit its crypto-asset-related business.” Metropolitan stated that it holds no exposure to crypto assets, but has business relationships with four customers focused on cryptocurrencies. The bank did not specify an exact date, but said that these relationships and the crypto business will be phased out this year.

What do you think the future holds for banks and the cryptocurrency industry? Share your thoughts in the comments below.

source https://news.bitcoin.com/massachusetts-based-bankprov-to-end-loan-offerings-secured-by-cryptocurrency-mining-rigs/

IB TV: What are the challenges facing the insurance industry in Western states?

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5 altcoins that produced double-digit gains as Bitcoin price rallied in January

Bitcoin’s strong monthly performance translated to outsized gains in APT, GALA, T, MANA and SOL, making them the top performing altcoins in January.

source https://cointelegraph.com/news/5-altcoins-that-produced-double-digit-gains-as-bitcoin-price-rallied-in-january

FTX Sues Voyager to Claw Back $446M

ALSO: Bitcoin NFTs backlash, Prime Trust lay offs, SBF bond co-signers' identifies and more |

January 31, 2023 The biggest crypto news and ideas of the day  Were you forwarded this newsletter? Sign up here. Don't want this newsletter? Unsubscribe Welcome to The Node. This is Daniel Kuhn, here to take you through the latest in crypto news and why it matters. In today's newsletter:   In the news: FTX's sister company Alameda Research is suing Voyager Digital to clawback bond payments. An independent investigator says Celsius functioned a lot like a Ponzi scheme. And what's happening with Bitcoin NFTs? The takeaway: Scott Fitsimones, founder of CityDAO and the author of "The DAO Handbook," writes about how to build better decentralized autonomous organizations. Bankruptcy Trials U.S. District Judge Lewis Kaplan ruled on Monday that the names of the two currently unidentified people who co-signed Sam Bankman-Fried's $250 million bail bond can be made public. It's already known that the FTX founder's parents also co-signed, but the other names were kept private under allegations of possible physical threats. This comes as Alameda Research filed a lawsuit against bankrupt lender Voyager Digital, in an attempt to claw back $446 million in loan repayments. FTX lawyers claim Voyager received $248.8 million in September, $193.9 million in October and a $3.2 million interest payment in August, which Alameda claims falls within the window to be returned under U.S. bankruptcy law. Switching gears, an independent examiner for the U.S. bankruptcy court in New York said in a Tuesday filing bankrupt crypto lender Celsius Network misled investors and operated like a Ponzi scheme.  Bitcoin Matters Triggered by anxieties the U.S. Federal Reserve will continue its attempt to restrain the economy, bitcoin dipped below $22,600 Monday to record its biggest single-day percentage loss since the FTX meltdown in November. Traders expect the Fed to raise interest rates by 25 basis points (bps) at its Federal Open Market Committee (FOMC) meeting, which begins Tuesday, although some fear a 50 bps hike is possible amid ongoing inflation worries. "There is a strong possibility that in the press conference, [Fed Chair Jerome] Powell will be more hawkish and re-tighten financial conditions. For that reason, we could see a healthy short-term correction in crypto and all risk assets," Wave Financial's Nauman Sheikh said. Elsewhere in the world of Bitcoin, the Ordinals protocol, a project bringing NFTs onto the Bitcoin platform has stirred backlash from some purists who say the blockchain should be restricted to financial transactions. Infrastucture Level Crypto infrastructure company Prime Trust laid off one-third of its staff Tuesday, reportedly limited to its communications and compliance departments. The firm, which provides services for companies including Swan, Abra and Okcoin, has recently faced headwinds including a suspension and fine in Texas. Separately, Twitter is designing a native payments system. Billionaire owner Elon Musk said this is "first and foremost" meant for fiat currencies, though he envisions a crypto expansion later – causing his favorite coin, DOGE, to rally. Elsewhere, German lender DekaBank is developing a digital asset offering for institutional clients. Like Societe Generale and Citibank, Switzerland's Metaco will provide custodial services for the platform pending regulatory approval. Finally, Hong Kong could enact its stablecoin licensing regime as early as this year, which would ban algorithmic stablecoins such as terraUSD.  Consensus is the world's largest, longest-running and most influential gathering of the crypto, blockchain and Web3 communities. Join us April 26-28 in Austin, Texas, to learn, grow and build alongside innovators, brands, creators, investors and more.  Use code NODE15 for 15% off your pass. Learn more and register. Sound Bites: Compliance Culture "A culture of compliance often begins at the top."    – CFTC Commissioner Kristin N. Johnson, on CoinDesk TV's "First Mover."  The Takeaway: Doing DAOs However, it became evident as soon as DAOs collided with the real world that these powerful new vehicles for crowdfunding and organization are constrained by immense coordination and regulatory costs that can negate the benefits of using a DAO in the first place. By understanding these costs, entrepreneurs, researchers and regulators have the opportunity to help DAOs deliver on their promise to create a fairer internet.   On the coordination side, DAOs add friction to using resources by requiring members to pass proposals. By default, most DAOs today are at risk of being what Ethereum co-founder Vitalik Buterin would call a vetocracy, where the default outcome is "no" unless a proposal sponsor rounds up sufficient support for their project. In some cases, the fact that democratic process adds friction is a feature, not a bug.   On the regulatory side, starting a DAO is easy – you can create a multisig (a multisignature wallet, which requires multiple people to sign transactions together) in minutes. The cost of starting a compliant DAO, however, is immense. Everything from incorporating an entity to paying contributors in jurisdictions around the world can take weeks of legal work and rack up hefty bills. If a DAO needs a lawyer and an accountant just to operate, that's an immense barrier to entry.   When it comes to raising money, vague securities laws can make crowdfunding a risky endeavor. When it comes to spending money on anything off-chain, a DAO will need to open an institutional trading account or "off-ramp," which can be a multi-month affair. And if the DAO owns real world assets like land and trademarks, the cherished property of forking, which allows a group that disagrees with the main group to branch off, becomes even harder or impossible.   Making DAOs work   Many of these coordination and regulatory costs can be solved with innovation. Entrepreneurs are building tools to ease burdens of DAO payroll, compliance and governance. Some of these barriers must be addressed at the policy level, for example by clarifying DAO statutes and securities laws. More research is also needed on governance mechanisms in order to move DAOs away from vetocracies and towards meritocracies.   Sometimes, though, the high coordination and regulatory costs are simply worth paying. For example, important pieces of internet infrastructure that touch the lives of many ought to be decentralized. MakerDAO, which acts as a sort of Federal Reserve guardian of the stablecoin DAI, is a great example of something that should be very decentralized because trust in the protocol is established by the fact it's (theoretically) stewarded by a large group and immune from the whims of a single person. The success of Bitcoin, Ethereum and the internet itself is largely due to decentralization, which has brought them robustness and passionate communities.   Making DAOs work is an important project for humanity because they promise us a more democratic future where we own and govern the town squares of tomorrow. One thing is certainly clear – demand for democratic systems is increasing, and people are skeptical of a few platforms ruling the internet. By lowering the coordination and regulatory costs, we can make DAOs more viable and help them fulfill their original vision to create a more level playing field and a more democratic internet.   – Scott Fitsimones, founder of CityDAO and the author of "The DAO Handbook" Off-Chain Signals  Solana Protocol Metaplex To Enable Royalty Enforcement (The Defiant) Rollup Wars: Battle Rages For the Future Of Ethereum Scaling (The Defiant) Nuclear Bitcoin Mining Hits Snag as UK Startup Sells Business (Blockworks) Crypto M&A Deals Hit Record High in 2022, Despite Downturn (Blockworks) As the MetaBirkins Case Goes to Trial, a Dive into Some of the Key Issues (Fashion Law) Celebrities Who Endorsed Crypto, NFTs Land in Legal Crosshairs After Investor Losses (WSJ – paywalled) The first-ever exchange-traded fund centered on non-fungible tokens, Defiance Diigital Revolution ETF, is slated to shutter (Bloomberg – paywalled) The Chaser: Bull Trapped The Node: A newsletter from CoinDesk Were you forwarded this newsletter? Sign up here.  Don't want this newsletter? Unsubscribe. Copyright © 2023 CoinDesk, All rights reserved.  250 Park Avenue South New York, NY 10003, USA See all of CoinDesk's newsletters | Manage subscriptions | Opt out

FTX Debtors Seek Dismissal of Turkish Entities in Chapter 11 Bankruptcy Proceedings

FTX debtors have filed a motion with the court requesting to dismiss its Turkish subsidiaries from the Chapter 11 bankruptcy proceedings. The defunct crypto exchange’s lawyers believe dismissing the entities “is in the best interests” of creditors, and FTX debtors do not believe Turkish authorities “or any liquidator” in the country will cooperate with officials from the United States.

FTX Lawyers Argue for Expelling Turkish Subsidiaries From Bankruptcy Proceedings

According to a recent bankruptcy court filing, FTX debtors have submitted a motion to remove the company’s Turkish entities from the Chapter 11 proceedings. The FTX-related units named in the court filing include FTX Turkey and SNG Investments. The debtors claim that FTX Turkey was a locally operated crypto exchange and SNG Investments was a wholly-owned Alameda Research subsidiary that acted as a market maker.

Shortly after FTX collapsed, lawyers say “Turkish authorities froze and seized substantially all the assets of the Turkish debtors.” FTX’s lawyers insist the two entities should be expelled from the bankruptcy proceedings, as they “believe it is in the best interests of the debtors and their stakeholders.” Furthermore, the debtors do not think the Turkish government will comply with the U.S. bankruptcy process.

“The debtors do not expect the Turkish authorities or any liquidator in Türkiye to seek recognition of their actions in the United States, and the debtors would intend to object to such recognition if reciprocity is not established,” the filing explains.

The news follows FTX lawyers asking the court’s permission to subpoena FTX co-founder Sam Bankman-Fried (SBF) and his inner circle. The filing notes that while SBF has publicly stated he’d like to “explain what happened” and “try to help customers,” he has “not responded to or complied” with requests. “As a result, a court-authorized subpoena is necessary,” the attorneys explained in the motion. In the latest filing, the debtors stress that dismissal of the Turkish debtors’ Chapter 11 cases “is warranted.”

Moreover, given that Turkish authorities froze the debtors’ assets, a Chapter 7 conversion “would not serve the best interests” of the debtors’ estates and creditors, the filing adds. The court document also details that the funds were seized by the Turkish government because the Turkish Financial Crimes Investigation Board (MASAK) was conducting an investigation into FTX’s business dealings. The lawyers conclude the bankruptcy court would not have any “legal or practical effect” in Turkey.

What are your thoughts on the recent motion by FTX debtors to dismiss their Turkish subsidiaries from Chapter 11 bankruptcy proceedings? Share your opinions in the comments below.

source https://news.bitcoin.com/ftx-debtors-seek-dismissal-of-turkish-entities-in-chapter-11-bankruptcy-proceedings/