SEC commissioner reiterates ‘the point of crypto’ as market aims for recovery
The SEC commissioner underscored that crypto is about solving a trust problem and how people can transact with those they do not know.

Hester Peirce, a commissioner on the Securities and Exchange Commission (SEC), said that after a terrible year, industry players need to remember what crypto is really about.

In a speech at the Digital Assets at Duke conference, Peirce laid down some lessons to be learned from the issues that the crypto industry had to face last year. According to the commissioner, 2022 was a “terrible, horrible, no good, very bad year” for both the crypto space and regulators. However, Peirce believed there were valuable takeaways from the series of problems that arose last year. She explained:

“Underlying these lessons is the truth that technology takes time to develop and often must combine with innovative developments in other fields to realize its full potential.”

In addition, the SEC commissioner underscored that the industry must always keep in mind that crypto is not about driving the prices up and dumping tokens to someone else. Peirce highlighted that the industry must remember that the underlying technology is about “solving a trust problem” and how people can interact and transact with people they don’t know. She explained that:

“Traditionally, people have looked to centralized intermediaries or government to solve this problem, but technology like cryptography, blockchain and zero-knowledge proofs offer new solutions.”

Apart from this, the commissioner also urged “people who believe in crypto’s future” not to wait for regulators to fix problems but instead act to stamp out harmful practices and encourage good behavior within the industry.

Peirce also said that it’s up to people within the industry to develop crypto’s value. “Crypto’s value proposition depends primarily on the builders of this technology, not on regulators like me, who lack technical expertise and stand on the periphery looking in,” she noted.

The last year was filled with challenges for those who believe in the space. Despite the catastrophes, there are still some good accomplishments for the space, like its display of resilience against market challenges that somehow sets the stage for a stronger foundation.

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Crypto exchange Digital Surge emerges as a rare survivor of FTX fallout
Crypto exchange Digital Surge has had its bailout plan approved by creditors, which will see it returning 100% of its customer’s funds within five years while remaining operational.

Australian cryptocurrency exchange Digital Surge appears to have narrowly avoided collapse, despite having millions of dollars in digital assets tied up in the now-bankrupt FTX crypto exchange.

On Jan. 24 local time, Digital Surge creditors approved a five-year bailout plan, which aims to eventually refund its 22,545 customers who had their digital assets frozen on the platform since Nov. 16, while allowing the exchange to continue operating.

The rescue plan was first floated to customers by the exchanges’ directors via email on Dec. 8, the same day the company fell into administration.

As per the “Deed of Company Arrangement,” the Australian crypto exchange will receive a 1.25 million Australian dollar ($884,543) loan from an associated business, Digico — allowing the exchange to continue trading and operating.

In a statement, administrators at KordaMentha stated that creditors would be paid over the next five years out of the exchange’s quarterly net profits.

“Customers will be repaid in cryptocurrency and fiat currency, depending on the asset composition of their individual claims,” KordaMentha said, according to a Jan. 24 report from Business News Australia.

Cointelegraph reached out to Digital Surge, which confirmed that creditors voted in favor of the rescue plan at their second meeting, on Jan. 24.

“We expect further communication will be provided to all customers as the administration process with KordaMentha progresses,” it added.

The Brisbane-based crypto exchange had been in operation since 2017 but became one of the casualties of FTX’s collapse in November, freezing withdrawals and deposits only days after FTX filed for bankruptcy and FTX Australia was placed into administration.

At the time, Digital Surge explained they had “some limited exposure to FTX” and would update customers in two weeks’ time — though that exposure was later revealed to be to the tune of around $23.4 million, according to KordaMentha.

The exchange has been one of the few crypto firms to form a solid plan to restart operations and avoid liquidation despite sizeable exposure to FTX.

Since November, several crypto firms, including crypto lending firms BlockFi and Genesis, have filed for Chapter 11 bankruptcy protection as a result of exposure to the fallout of FTX and market turmoil.

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Breaking: BlockFi uncensored financials reportedly shows $1.2B FTX exposure
Bankrupt crypto lending firm BlockFi has reportedly uploaded financial documents by mistake showing a $1.2 billion tie up with FTX and Alameda Research.

Bankrupt crypto lending firm BlockFi has reportedly uploaded uncensored financials by mistake, revealing $1.2 billion in assets tied up with bankrupt exchange FTX and irelated trading firm Alameda Research.

According to a Jan. 24 report from CNBC, the unredacted filings show that as of Jan. 14, BlockFi had $415.9 million worth of assets linked to FTX and a whopping $831.3 million in loans to Alameda.

The previously censored financials were leaked as part of a presentation put together by M3 Partners, which is an advisor to the creditor committee and has reportedly admitted the filing was uploaded in error.

The correctly redacted Nov. 24 declaration relates to the creditor committee's objection that BlockFi is seeking to pay key employees $12.3 million in retention payments despite their limited operations and assets.

According to a subsequent filing, the redacted portions include “trade secret[s] or confidential research, development, or commercial information.”

On Nov. 29, during the first-day hearing of its bankruptcy proceedings, BlockFi’s lawyers said the figures were $355 million stuck on FTX and $680 in loans to Alameda, but the value of the funds has increased with the price of Bitcoin since then.

While BlockFi has attempted to separate itself from FTX and Alameda throughout its bankruptcy proceedings the state of financial obligations between the firms is complicated.

On July 1, FTX US — FTX’s U.S. arm — extended a $400 million line of credit to BlockFi after the lender was caught up in the contagion caused by the collapse of Terra’s algorithmic stablecoin on May 10.

The loan is set to expire on June 30, 2027, and has an interest rate of 5%.

The deal also provided FTX US with the option to acquire BlockFi for “a variable price of up to $240 million based on performance triggers.”

On Nov. 28, BlockFi also sued a holding company of Sam Bankman-Fried’s, Emergent Fidelity Technologies, seeking collateral that the firm had pledged to pay on Nov. 9, including shares in the online brokerage Robinhood.

BlockFi filed for Chapter 11 bankruptcy on Nov. 28, citing the collapse of FTX just weeks earlier as the cause of its financial troubles.

Cointelegraph contacted BlockFi and M3 Partners for comment but did not immediately receive a response.

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This Daily Dose was brought to you by Cointelegraph.

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