MCS Crypto News - Issue #11

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Today we're peeling back the layers of the FTX scandal, a seismic event that's left the cryptocurrency industry reeling. At the epicenter are Sam Bankman-Fried, the prodigious former CEO of FTX, and Caroline Ellison, his ex-girlfriend and former CEO of Alameda Research, the FTX affiliant hedgefund.

Their entwined personal and professional lives have spilled into the courtroom, shedding light on a convoluted saga of alleged deceit, conflicts of interest, and corporate malfeasance that precipitated the dramatic collapse of FTX.

We’ll also touch on how a stablecoin became…well… not so stable.

Here we go:

In the high-profile trial of Sam Bankman-Fried, former CEO of FTX, the day has come for Caroline Ellison to testify. The things she said are pretty damning.

🌟 Key Highlights from Ellison's Testimony: 🌟

• Ellison, former CEO of Alameda Research, testified against Sam Bankman-Fried, placing the blame for the misuse of FTX user funds squarely on him.

• She admitted to her involvement in fraudulent activities, specifically providing misleading balance sheets to investors to make Alameda appear less risky.

• Ellison revealed that Alameda took billions from FTX customers for investments, a move she claims was orchestrated by Bankman-Fried.

🚀 Ellison's Relationship with Bankman-Fried: 🚀

• The two met at Jane Street Capital, and Bankman-Fried persuaded Ellison to join his crypto ventures.

• Their professional and personal relationship is central to the case, highlighting potential conflicts of interest and internal dynamics.

💥 Explosive Revelations: 💥

• Ellison accused Bankman-Fried of setting up systems that allowed Alameda to siphon roughly $14 billion from FTX.

• She detailed how they used customer funds for various investments and personal gains, including political contributions. Bankman-Fried was the 2nd largest donor to the democrats, behind only the notorious George Soros.

• Ellison’s testimony sheds light on the lack of internal controls and the alleged deceptive practices within FTX and Alameda.

🔥 Impact on the Trial: 🔥

• Ellison’s testimony is a cornerstone of the prosecution's case, providing an insider’s perspective.

• The defense is attempting to shift some blame onto Ellison, questioning her role and decisions.

• Her admissions and accusations have intensified the scrutiny on Bankman-Fried’s actions and the operations of both FTX and Alameda.

🌐 What's Next? 🌐

• The trial continues, with the defense expected to cross-examine Ellison and further witnesses to be called.

• The crypto community and investors are closely watching the developments, seeking clarity on the full extent of the alleged fraud and mismanagement.

🏡 Introduction to USDR on Polygon 🏡

USDR is a stablecoin on Polygon. It’s backed by real estate. Stablecoins are designed to be just that - stable. Usually their pegged to an asset like the US Dollar.

💵 USDR's Treasury Depletion 💵

USDR's value experienced a rapid decline to nearly $0.51 within a few hours due to a substantial depletion of its treasury. The treasury, responsible for maintaining the coin's stability, currently holds zero DAI. Instead, it retains a $6.2 million insurance fund, intended to support a circulating supply of 45 million USDR, valued at $45 million when pegged to the US dollar.

📊 Backing and Market Data 📊

The treasury also relies on the TNGBL token. However, market data from CoinGecko reveals that the TNGBL token has a 24-hour trading volume of less than $300,000, and its bid depth is less than $5,000 on UniSwap. This limited liquidity makes it challenging to liquidate significant quantities, exacerbating USDR's stability issues.

🔄 Trading Behavior 🔄

Polygon's block explorer data highlights that some traders are offloading USDR in USDC trading pairs for a fraction of its intended value. This behavior further contributes to the coin's recent instability.

📈 The response 📈

Despite the challenges, it's noteworthy that USDR's official website still advertises a 16% yield, which could be enticing for investors seeking returns on their holdings.

The team has stated that the real estate backing the $USDR stablecoin still exists - and is currently worth more than the coin it backs. It has yet to be seen what the team will do to fix the problem and get the coin to repeg.

That’s all for today. We’ll see you tomorrow for MCS Crypto 101.

Thank you so much for subscribing to Make Crypto Simple.

Chris Schawel


^{The content provided in this newsletter is for entertainment purposes only and should not be construed as financial advice. All information, including but not limited to market analysis, price predictions, and investment strategies, is purely speculative in nature. We strongly recommend conducting your own research and consulting with a qualified financial advisor before making any investment decisions. We are not responsible for any losses incurred as a result of the information presented in this newsletter.}