Weekly Flip Thru: Crypto Lender Genesis Files for Bankruptcy, Spain’s Central Bank to Test Digital Payments in 2023
Happy Year of the Rabbit, everyone! Let’s hop right into the biggest crypto news stories of the week to kickstart the lunar new year. Leading off, crypto lender Genesis Global filed for bankruptcy protection last week. Next, we’ll examine rumors that beleaguered crypto exchange FTX is looking to relaunch, and the effect that news had on crypto prices. Finally, the central bank of Spain announced a plan to test out a digital payment option that’s linked to the euro.
Crypto Lender Genesis Global Files for Bankruptcy Protection (CoinDesk)
The crypto lending firm Genesis Global Capital filed for bankruptcy protection last Friday, January 20. The firm and its parent company Digital Currency Group (DCG) had been dragged into a public spat with Gemini, a crypto firm helmed by the Winklevoss twins. Gemini’s leadership had publicly called out Genesis and its owner in an effort to recoup a $900-million loan. Besides the Twitter beef between Gemini and DCG, Genesis had significant exposure to a pair of 2022’s most notable crypto firms to declare bankruptcy: the hedge fund Three Arrows Capital and Sam Bankman-Fried's FTX. Genesis reportedly owes more than $3.5 billion to its top 50 creditors.
FTX’s Native Token Surges to 30-Day High on Speculation the Exchange Could Restart (Bloomberg)
A statement by John J. Ray III, the new CEO of FTX, caused prices of the FTT token to jump by more than 40% last week – and presumably, many more eyebrows jumped at the notion that the tarnished crypto exchange founded by Sam Bankman-Fried could rise from the dead. Still, a relaunch of FTX is one of the options under consideration for the bankrupt exchange as the company works out a plan to repay customers and creditors. Questions about FTX’s reputation aside, the FTT token briefly surged to nearly $2.70 on January 19, 2023, a 30-day high for the controversial crypto asset. That’s more than 90% off FTT’s all-time high close to $80, though.
Spain’s Central Bank to Test a Digital Payment Token for Citizens in 2023 (Cointelegraph)
The Bank of Spain will experiment with a digital payment token backed by the euro in a 6-12-month pilot program. The move by Spain’s central bank signals the growing adoption of digital payment options around the globe. Although the tokens in the test program will be backed 1:1 by physical euros sitting in the bank, this is not the same thing as a central bank digital currency (CBDC) pilot. A CBDC would take the place of a nation’s fiat currency and function the same way that traditional currency does, with every transaction recorded on the blockchain.
The New York Federal Reserve joined with a group of other banks in late 2022 to pilot a version of a digital dollar in a similar sandbox-style experiment. There are a couple of key differences in the New York Fed’s experiment and the Bank of Spain’s trial, though. There are no actual customer funds associated with the trial taking place in New York and it is planned to last only a few weeks, as opposed to Spain’s experiment with digital payments that could last up to a year.
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