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Crypto’s Lehman moment: Investors buy $250M of FTX claims — Report

It’s hard to know how much a collapsed crypto firm like FTX would be worth by the time its bankruptcy is resolved.
The bankruptcy…

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It’s hard to know how much a collapsed crypto firm like FTX would be worth by the time its bankruptcy is resolved.

The bankruptcy claims market has been growing bullish on the debts of the collapsed cryptocurrency exchange FTX as major credit investors have been rushing to buy FTX debts.

Investors like Silver Point Capital, Diameter Capital Partners and Attestor Capital have purchased more than $250 million worth of FTX debts so far in 2023, Bloomberg reported on Sept. 21, citing an in-house analysis of public court filings.

The FTX debt has also attracted investors like Hudson Bay Capital Management, which reportedly bought a $23 million FTX claim and subsequently sold about 50% of it to Diameter.

In line with growing demand, the price of some FTX claims has been soaring this year. Some low-ranking FTX claims have jumped 191%, surging from $0.12 in early 2023 to about $0.35 recorded in recent weeks, the report said, citing data from the crypto debt broker Claims Market.

The historical indicative prices of “bid” and “ask” for larger FTX claims have also been on the rise this year, according to the Claims Market’s charts.

Historical indicative prices of “bid” and “ask” for larger FTX claims. Source: Claims Market

The debt investors have been piling up FTX Group claims, betting that the firm’s bankruptcy process would unlock additional value by the time it’s resolved. One potential trade-off is that major bankruptcies can take years to unwind, and it can be hard to know what a collapsed company would be worth, especially in crypto.

According to some bankruptcy claim investors, the total value of all traded FTX claims might be much higher than the $250 million of deals seen in public court records.

Related: Stanford to return millions in crypto donations from FTX

Bankruptcy claims investor Thomas Braziel reportedly said that buyers and sellers sometimes wait months to file the paperwork for a debt trade. He claimed to be aware of individual FTX claims of more than $100 million. Braziel stated in the report:

“People made careers off of Lehman and Madoff — I think people see FTX as a Lehman or Madoff. The guys that are buying in these dockets, I consider them some of the smartest people in distressed.”

According to the report, many investors have been buying the rights to FTX crypto accounts with assets stuck on the platform after FTX halted all withdrawals in November 2022. Debt investment firm Contrarian Capital Management reportedly purchased an FTX account holding a massive amount of Bitcoin (BTC) and Ether (ETH), alongside $430,000 of cash.

Some crypto bankruptcies have also been taking years to be settled. Mt. Gox, once a major crypto exchange that was hacked back in 2014, has recently again postponed the deadline to return Bitcoin holdings to investors by one more year. At the time of writing, Bitcoin has surged more than 3,000% since Mt. Gox barred its users from withdrawing crypto in the aftermath of the hack.

The news comes amid FTX restructuring executives reminding investors to complete the claims process through the FTX Customer Claims Portal by the deadline of Sept. 29, 2023.

Magazine: Asia Express: PEX staff flee event as scandal hits, Mt. Gox woes, Diners Club crypto

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Ushering in the era of light-powered ‘multi-level memories’

We live in an era of data deluge. The data centers that are operated to store and process this flood of data use a lot of electricity, which has been called…

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We live in an era of data deluge. The data centers that are operated to store and process this flood of data use a lot of electricity, which has been called a major contributor to environmental pollution. To overcome this situation, polygonal computing systems with lower power consumption and higher computation speed are being researched, but they are not able to handle the huge demand for data processing because they operate with electrical signals, just like conventional binary computing systems.

Credit: Korea Institute of Science and Technology

We live in an era of data deluge. The data centers that are operated to store and process this flood of data use a lot of electricity, which has been called a major contributor to environmental pollution. To overcome this situation, polygonal computing systems with lower power consumption and higher computation speed are being researched, but they are not able to handle the huge demand for data processing because they operate with electrical signals, just like conventional binary computing systems.

The Korea Institute of Science and Technology (KIST, President Seok Jin Yoon) announced that Dr. Do Kyung Hwang of the Center for Opto-Electronic Materials & Devices and Professor Jong-Soo Lee of the Department of Energy Science & Engineering at Daegu Gyeongbuk Institute of Science and Technology (DGIST, President Young Kuk) has jointly developed a new zero-dimensional and two-dimensional (2D-0D) semiconductor artificial junction material and observed the effect of a next-generation memory powered by light. Transmitting data between the computing and storage parts of a multi-level computer using light rather than electrical signals can dramatically increase processing speed.

The research team has fabricated a new 2D-0D semiconductor artificial junction material by joining quantum dots in a core-shell structure with zinc sulfide (ZnS) on the surface of cadmium selenide (CdSe) and a molybdenum sulfide (MoS2) semiconductor. The new material enables the storage and manipulation of electronic states within quantum dots measuring 10 nm or less.

When light is applied to the cadmium selenide core, a certain number of electrons flow out of the molybdenum sulfide semiconductor, trapping holes in the core and making it conductive. The electron state inside cadmium selenide is also quantized. Intermittent light pulses trap electrons in the electron band one after the other, inducing a change in the resistance of the molybdenum sulfide through the field effect, and the resistance changes in a cascading manner depending on the number of light pulses. This process makes it possible to divide and maintain more than 0 and 10 states, unlike conventional memory, which has only 0 and 1 states. The zinc sulfide shell also prevents charge leakage between neighboring quantum dots, allowing each single quantum dot to function as a memory.

While quantum dots in conventional 2D-0D semiconductor artificial junction structures simply amplify signals from light sensors, the team’s quantum dot structure perfectly mimics the floating gate memory structure, confirming its potential for use as a next-generation optical memory. The researchers verified the effectiveness of the polynomial memory phenomenon with neural network modeling using the CIFAR-10 dataset and achieved a 91% recognition rate.

Dr. Hwang of KIST said, “The new multi-level optical memory device will contribute to accelerating the industrialization of next-generation system technologies such as artificial intelligence systems, which have been difficult to commercialize due to technical limitations arising from the miniaturization and integration of existing silicon semiconductor devices.”

 

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KIST was established in 1966 as the first government-funded research institute in Korea. KIST now strives to solve national and social challenges and secure growth engines through leading and innovative research. For more information, please visit KIST’s website at https://eng.kist.re.kr/

This research was supported by the Ministry of Science and ICT (Minister Jong-ho Lee) as a mid-career researcher project and a major project of KIST, and the results were published in the international journal Advanced Materials (IF: 29.4).

 

Journal Link: Advanced Materials, Jul-2023


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FTX customers could get $9B shortfall claim payout by mid-2024

A proposed settlement could see creditors receive a shortfall claim of $8.9 billion for FTX.com and $166 million for FTX US.
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A proposed settlement could see creditors receive a shortfall claim of $8.9 billion for FTX.com and $166 million for FTX US.

Customers of bankrupt crypto exchange FTX and FTX US could see over 90% of assets returned to them by the end of the second quarter of 2024 after a proposed settlement was reached between FTX creditors and debtors.

On Oct. 17, FTX debtors said they reached a “major milestone” in their Chapter 11 case after “extensive discussions” with the unsecured creditors' committee, a committee of non-US customers, and class action plaintiffs regarding customer property disputes.

FTX ebtors filed a notice of the proposed settlement to a Delaware-based United States Bankruptcy Court on Oct. 16 (for information purposes). However, they need to submit an official filing by Dec. 16 seeking the court’s approval.

Part of the amended plan consists of the “Shortfall Claim,” in which FTX debtors estimates that customers of FTX.com and FTX US would collectively receive 90% of assets available for distribution.

The Shortfall Claim is estimated to be approximately $8.9 billion for FTX.com and $166 million for FTX US. If approved by the Bankruptcy Court, FTX expects these funds to be disbursed by the end of the second quarter of 2024.

John. J. Ray III, CEO and chief restructuring officer of the FTX, was pleased with the terms of the settlement:

"Together, starting in the most challenging financial disaster I have seen, the debtors and their creditors have created enormous value from a situation that easily could have been a near-total loss for customers.”

The amended plan involves FTX dividing the assets into three pools — assets segregated for the benefit of FTX.com customers, U.S. customers and a general pool of other assets. However, only the first two groups are included in the Shortfall Claim.

FTX debtors however anticipate that customers of both exchanges will not be paid in full and that FTX.com would likely see a greater percentage of losses.

FTX customer clawbacks

Meanwhile, observers noted a part of the proposed plan sees to it that customers that withdrew over $250,000 from the exchange within nine days of bankruptcy would have their claim reduced by 15% of the amount.

However, claims under $250,000 wouldn't be subject to a reduction, FTX debtors explained:

"Eligible customers that have a preference settlement amount of less than $250,000 during the nine-day period would be able to accept the settlement without any reduction of claim or payment."

Related: Caroline Ellison wanted to step down but feared a bank run on FTX

However, as part of the amended plan, FTX may exclude from the settlement any insiders, affiliates and customers who may have had knowledge of the commingling and misuse of customer deposits and corporate funds, it said.

Former FTX CEO Sam Bankman-Fried is two weeks into his fraud trial on matters relating to his involvement in FTX’s collapse to bankruptcy last November.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

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Dev platform Stack Overflow axes 28% of staff as AI competition grows

The technology Q&A forum has seen declines in web traffic since the launch of ChatGPT in 2022.
Developer and programmer platform…

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The technology Q&A forum has seen declines in web traffic since the launch of ChatGPT in 2022.

Developer and programmer platform Stack Overflow is cutting the company’s headcount by approximately 28% amid a rise in the popularity of artificial intelligence (AI) chatbots. 

On Oct. 16, Stack Overflow CEO, Prashanth Chandrasekar, made the announcement citing the challenges of macroeconomic pressures impacting the entire tech industry.

The firm is on a “path to profitability” and “continued product innovation,” said Chandrasekar who added, “This year we took many steps to spend less.”

Stack Overflow is a 15-year-old tech-focused question-and-answer forum for millions of developers, coders, and enthusiasts. It doubled its headcount in 2022 to 540, according to reports, so this week’s layoffs account for around 150 employees.

In August, Stack Overflow noted that its web traffic has seen a small decline compared to 2022, falling by an average of 5%.

"Conversely, in April of this year, we saw an above-average traffic decrease (~14%), which we can likely attribute to developers trying GPT-4 after it was released in March," it added.

The firm also said it expected generative AI to cause "some rises and falls in traditional traffic and engagement over the coming months."

Meanwhile, technology outlets such as Ars Technica have attributed the rise of AI chatbots to declines in the traffic and usage of traditional social knowledge-sharing platforms such as forums.

“Chatbots can offer more specific help than a 5-year-old forum post ever could,” it stated on October 17. ChatGPT and the like can also correct code, provide optimization suggestions, and explain what each line of code is doing.

New York University Leonard N. Stern School of Business Professor Panos Ipeirotis also made a similar suggestion in an X post on Oct. 17. 

Screenshot from X post by professor Panos Ipeirotis on Oct. 17. Source: X/@ipeirotis

However, Stack Overflow is working on its own answer to OpenAI’s ChatGPT in the form of “Overflow AI,” announced in July.

The goal is to introduce new features to leverage Stack Overflow's community knowledge to power AI that provides developers with personalized, trustworthy solutions. Chandrasekar concuded.

“As we refine our focus, priorities, and strategy it's to better meet the demands of our users, customers, and partners as part of this commitment to product innovation and the continued momentum of OverflowAI.”

Cointelegraph contacted Stack Overflow for comment but was referred back to the Oct. 16 announcement.

Related: How AI is changing crypto: Hype vs. reality

In related news, the Coinhouse crypto exchange has also axed 15% of its workforce according to reports.

The 2015-founded French exchange has laid off 10 of its 70 employees citing “reduced enthusiasm for Web3 and a fragile global economic environment.”

Earlier this month French hardware wallet provider announced a 12% staff reduction.

Magazine: ‘AI has killed the industry’: EasyTranslate boss on adapting to change

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