NiftyNoon: Centralized Exchange Chaos

For November 14, 2022

Nifty Thought

• It seems that trust for centralized exchanges is hitting all-time lows as more questions emerge regarding solvency. While it is sensible to take off crypto from centralized exchanges to completely self custody, this is likely going to be a barrier for mainstream crypto and NFT adoption moving forward. Self-custody is not easy and is particularly dangerous for NFTs where frequent smart contract interactions with highly valuable assets is the norm. A better solution must emerge that combines the trust of self-custody with the effortless security of custodial exchanges.

• The FTX contagion seems to largely be spreading to fears for other exchanges such as Crypto.com, Gate.io, and Huobi. Ultimately, mass panic of insolvency is likely enough to trigger a bank run that causes insolvency. For this reason alone, the death spiral crypto has been experiencing is likely far from over. However, it is also important to remember that the fundamental value proposition for crypto remains unchanged. Stay safe and responsible.

Project News

• FTX hacked with hundreds of millions of user deposits stolen amidst bankruptcy proceedings:

  foobar @0xfoobar

  Hundreds of millions of dollars are now flowing out of FTX wallets, some speculate liquidators but it's late on a friday night, not typical times for such rapid heavy movements. Some withdrawals are being swapped from Tether to DAI. Hack or insider actions? $26 million here

  

  Ryne Miller @_Ryne_Miller

  2/ Among other things, we are in the process of removing trading and withdrawal functionality and moving as many digital assets as can be identified to a new cold wallet custodian.  As widely reported, unauthorized access to certain assets has occurred.

• In a move that calls their solvency into question, Crypto.com sends 80% of their ETH to Gate.io during push to provide proof of reserves:

  Cobie @cobie

  Crypto dot com accidentally sent 80% of their cold storage ETH to Gate and then … asked for it back???

  

  Kris | Crypto.com @kris

  @ledgerstatus @jconorgrogan It was supposed to be a move to a new cold storage address, but was sent to a whitelisted external exchange address. We worked with Gate team and the funds were subsequently returned to our cold storage. New process and features were implemented to prevent this from reoccurring.

  Loopify 🧙‍♂️ @Loopifyyy

  CZ hinting at Crypto,com and Gate,io not being safe after weird transactions taking place. ➡️ I recommend taking your money out of these platforms. There is no reason whatsoever to keep your coins there, especially amidst all of this.

  

• Huobi’s issued proof of reserves called into question after suspicious asset movement as the exchange announces it has lost $18.1 million due to the FTX withdrawal halt:

  Wu Blockchain @WuBlockchain

  After Huobi released the asset snapshot of the asset reserve, 10,000 ETH was transferred from 0xca...c3fc (Huobi 34) to Binance and OKX deposit wallets. The Huobi 34, which had 14,858 ETH at the time of the snapshot, currently has only 4,044 ETH left. etherscan.io/txs?a=0xcac725…

  

  Rugdoc.io @RugDocIO

  Huobi announced $18.1 million in crypto cant be withdrawn on FTX- $13.2m are customer assets. A $14m unsecured loan will cover the client loss, creating a $32m debt for Huobi Like I said before: there will be unpredictable fall out from FTX in the following weeks. Derisk now.

  

• Securities Commission of the Bahamas states that FTX Bahamian withdrawals were not ordered or sanctioned by the Bahamas government and such withdrawals may be subject to bankruptcy clawbacks:

  foobar @0xfoobar

  Turns out enabling withdrawals for Bahama residents only was yet another fraud. Regulators directed no such thing, expect clawbacks

  

Community News

• CryptoPunks hold their lead over Bored Ape Yacht Club as the top NFT project by market cap:

  borovik.eth @3orovik

  6 months ago 1 bayc = 3 cryptopunks Today 1 crypto punk is 7.5e higher than 1 bayc

  

• Co-Founder of 3AC begins to recount his experience running his highly controversial failed crypto fund:

  Kyle Davies 🔺 @KyleLDavies

  The universe works in mysterious ways. Over the past year, I’ve seen the highest high and lowest low of my life. I know many reading this have as well. Humanity, community, happiness are worth it. Love.

Quick Stats:

• OpenSea ETH Daily Volume: 4,842 ETH (▼ 11.88%)

• Blur ETH Daily Volume: 1,226 ETH (▼ 15.09%)

• BTC: $16,541.24 (▼ 0.09%)

• ETH: $1,244.01 (▲ 1.11%)

• Solana: $13.90 (▲ 0.40%)

• Polygon: $0.92 (▲ 2.33%)

NFT Daily Winners:

• Chromie Squiggles: 13.25 ETH (▲ 10.42%)

• Clone X: 7.25 ETH (▲ 2.26%)

• Moonbirds: 7.16 ETH (▲ 1.69%)

• Mutant Ape Yacht Club: 10.00 ETH (▲ 1.01%)

• Azuki: 9.69 ETH (▲ 0.21%)

• VeeFriends: 5.89 ETH (► 0.00%)

• CryptoPunks: 64.95 ETH (► 0.00%)

NFT Daily Losers:

• Doodles: 5.82 ETH (▼ 1.19%)

• DigiDaigaku: 7.60 ETH (▼ 3.80%)

• Proof Collective: 30.00 ETH (▼ 5.36%)

• Bored Ape Yacht Club: 54.55 ETH (▼ 5.45%)

Notes:

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