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Monthly Wrap-Up — March

March wrap-up: Crypto continues to see green, but for how long?

February turned out to be a positive month for the crypto market, both financially and investor sentiment-wise. March has provided much of the same optimism: between the 1st and 31st of the month, the sector’s total market capitalization rose from $1.1 trillion to an impressive 1.23 trillion, showcasing a growth of nearly 10%.

From a news-centric standpoint, crypto has had quite eventful month, with new regulatory activity, market shifts, and financial instability causing concern for investors and industry insiders.

Fears Arise Over Silvergate’s $8B Hole at FTX.

Recently defunct Silvergate Bank, a key partner of the now infamous FTX crypto exchange, was revealed to have an almost $8 billion hole in its balance sheet. Once again, it raises concerns about the reliability of traditional financial institutions operating within the crypto industry.

US Senators Seek Clarity on Binance’s Numbers

Several American senators, including Elizabeth Warren, recently wrote to Binance CEO Changpeng “CZ” Zhao and Binance.US CEO Brian Shroder, expressing apprehension over the crypto exchange’s day-to-day operations and requesting its balance sheets.

The policymakers claim that the exchange has repeatedly sidestepped regulators and sanctions, having laundered at least $10 billion. Binance, as it is said, is preparing to resolve its outstanding legal and regulatory issues in the United States.

SBF Seeks Legal Fees Reimbursement as Case Gets Murkier

According to court documents filed on March 15, Sam Bankman Fried, FTX ex-CEO,  is looking to utilize corporate insurance policies to take care of his personal legal fees. These policies grant antecedence to insured individuals, which would prioritize Bankman-Fried’s payments from FTX.

Additionally, reports claim that Bankman-Fried’s associates received $3.2 billion in payments and loans from FTX-linked entities (excluding luxury property purchases, political and charity donations, and transfers to non-FTX subsidiaries). Meanwhile, FTX debtors have filed $11.6 billion in claims but only have $4.8 billion in assets, indicating a significant shortfall of $6.8 billion in the exchange’s balance sheet.

BTC’s Marketcap Flips Meta

During the second week of March, the market capitalization of Bitcoin surpassed that of Meta, formerly known as Facebook. This milestone underscored the growing importance of cryptocurrencies as a legitimate asset class — and a potential challenger to traditional tech giants.

USDC Depegs and Then Climbs Back to $1

In a huge blow to stablecoins, USDC, a digital asset issued by Circle, briefly lost its 1:1 dollar backing, causing concern among investors. To elaborate, on March 10 — i.e., following the collapse of Silicon Valley Bank — the stablecoin’s value deviated from its peg.

As was to be expected, following the development, there was a surge in loan repayments, enabling borrowers to save over $100 million on their loans. The incident has further stressed the need for greater transparency and oversight of the stablecoin market, which has faced increasing regulatory scrutiny in recent months.

The SEC Continues to Target Coinbase

Coinbase was hit with a Wells notice from the US Securities and Exchange Commission (SEC), indicating that an enforcement action may be imminent. The notice targets the exchange’s staking program, wallet, listed digital assets, and even Coinbase Prime services.

Paul Grewal, the exchange’s chief legal officer, stated that the warning followed multiple registration proposals submitted by Coinbase to the SEC over the course of several months, which were ultimately left unanswered. Following this development, Coinbase CEO Brian Armstrong once again urged crypto users in the US to vote for “pro-crypto candidates.”

Do Kwon Gets Put Behind Bars

Do Kwon, Terraform Labs CEO, was arrested in Montenegro and charged with eight counts by US prosecutors. The charges include securities fraud, wire fraud, commodities fraud, and conspiracy to defraud and manipulate the market.  Kwon is also facing criminal charges in Montenegro for the purported falsification of his travel documents.

As a quick reminder, South Korean prosecutors issued an arrest warrant for Kwon last September, followed by a red notice listing from Interpol just a few weeks later. The charges laid against Kwon are related to his purported involvement in the collapse of the $40 billion Terra Luna Classic token and TerraClassicUSD stablecoin, which took place in May 2022.

FTX Debtors Approve $95M Mysten Stock Sale

As FTX’s bankruptcy proceedings continue to make headlines, debtors of the collapsed cryptocurrency exchange have approved an agreement to sell its preferred stock in Mysten Labs, the firm behind the Sui blockchain, for $95 million. However, the final approval is still pending, as we may still see other bids made on the firms’ stocks.

In another development, FTX is reportedly pursuing the recovery of $460 million of customer funds allegedly misappropriated by Modulo Capital venture capital firm, which had received a substantial investment from Alameda Research in the past year. The investment had purportedly been facilitated by former FTX CEO Sam Bankman-Fried, who is facing multiple counts of fraud in federal court.