LedgerX “Not Yet Approved” by CFTC to Launch Physical Bitcoin Futures

The United States Commodities and Futures Trading Commission (CFTC) confirmed that LedgerX has not yet been approved to offer physically-settled Bitcoin futures in contrary to previous announcements.

LedgerX has officially launched their product on July 31, as they revealed to CoinDesk that they had launched the first physically-settled Bitcoin futures contracts in the U.S, surpassing Intercontinental Exchange’s Bakkt and TD Ameritrade-backed ErisX. CEO of LedgerX, Paul Chou disclosed to the media that retail customers can now be able to trade the product using the company’s new platform.

CFTC Chief Communications Officer Michael Short said in an emailed statement on Aug 1, “LedgerX has not yet been approved by the commission.” The CFTC approved LedgerX as a designated contract market (DCM), which was one of the two approvals LedgerX needed to proceed with the launch.

However, the CFTC has not yet approved the amendment the derivatives clearing organization (DCO) license. The CFTC states that they have 180 days to approve or deny a DCO application, which led to the conclusion by the LedgerX team that this period has passed, and they have not received an objection from the CFTC as they submitted the amendment on Nov 8, 2018. Paul Cho added that since it has been more than 180 days, they do not understand why the amendment has not been approved. He also added that there is little difference between swaps and futures products, but officially, they still lack the approval to launch physical Bitcoin futures.

FTX.US Exchange Acquires Regulated Derivatives Provider LedgerX

FTX.US, the United States subsidiary of FTX Derivatives Exchange, has announced the acquisition of LedgerX- a Commodity Futures Trading Commission (CFTC) licensed derivatives and options service provider.

As contained in the official announcement, the financial commitment of the deal remains undisclosed, and it is pending the satisfaction of customary closing conditions.

As a major player in the global cryptocurrency derivatives market, FTX exchange as a brand has grown its numbers, with a notable average daily trading volume of over $18 billion. Under the leadership of CEO Sam Bankman Fried, the exchange pulled over $900 million funding from investors, a capital boost that was available to push forth the company’s expansion and M&A activities.

As a regulated Designated Contract Market (DCM), Swap Execution Facility (SEF), and Derivatives Clearing Organization (DCO), the acquisition of LedgerX will let the companies build on this regulatory backing to expand its offerings to both retail and institutional investors alike. While harnessing the strength of its current customer base, the FTX brand influence is billed to enable the startup to increase its scope in the competitive industry.

Zach Dexter, CEO and Co-Founder of LedgerX, said:

“US crypto derivatives is an incredibly underserved market, and it took time and resources for us to become a regulated entity under the existing frameworks. FTX.US has taken the view, which we share, that US regulators are ready and willing to partner on innovative products, and it’s the responsibility of the industry as a whole to step up and work with agencies like the CFTC,” 

Most cryptocurrency firms have found maintaining a positive business environment in the United States difficult over time. With regulators like the CFTC and its regulatory demands, many firms have been caught up in the commission’s bad books.

According to an earlier report by Blockchain.news, the BitMex derivatives exchange recently agreed to a $100 million settlement to the CFTC alongside the Financial Crimes Enforcement Network (FinCEN) for allegations bordering illegal business operations.

Known for its strategic acquisitions, assuming ownership of LedgerX will give the FTX brand a free ride to operate in the US without fears of a clampdown.

FTX Completes $420M Series B-1 Funding Round at $25B Valuation

FTX Derivatives Exchange has completed a $420.69 million Series B-1 funding with participation from top investors.

As announced by the firm, these investors include the Ontario Teachers’ Pension Plan Board, via its Teachers’ Innovation Platform, Temasek, Sequoia Capital, Sea Capital, IVP, ICONIQ Growth, Tiger Global, Ribbit Capital, Lightspeed Venture Partners, and funds and accounts managed by BlackRock.

The funding round came just after the company raised $1 billion back in July 2021. Following this latest funding round, the Bahamas-based outfit has increased its valuation to $25 billion, further extending its position as a unicorn in the digital currency ecosystem. The company said it is going to deploy the new funds in expanding its product offerings and pushing forth into new markets globally. Ramnik Arora, Head of Product at FTX, said:

“The additional capital and group of investors will let us provide the experience our users deserve and address other adjacent market opportunities including equities, prediction markets, NFTs, and videogame partnerships. We expect to make strategic investments designed to grow the business and expand our regulatory coverage,” 

While FTX has also had to adjust its operations in line with regulatory pressures globally, the company has inked several milestones that have positioned it on its next growth phase. Since its last funding round, the Sam Bankman-Fried led organization has established its headquarters in the Bahamas while also securing licenses under new regulatory frameworks in both the Bahamas and Gibraltar.

The firm is also strategic in its product offerings as it has floated an NFT marketplace, a growing trend amongst major digital currency exchanges today. Known for its Merger & Acquisition acquisitions, the company acquired Blockfolio through a record-breaking $150 million deal at the time, and its US affiliate, FTX.US, also acquired CFTC regulated clearinghouse, LedgerX. 

While the company did not declare any plans to make any acquisition with the latest capital injection, doing so will not be out of place in its push to expand its reach in the industry.

Bitvo abandons FTX purchase

The Canadian cryptocurrency exchange Bitvo has terminated the proposed acquisition transaction it had with the FTX in order to preserve its standing as an autonomous company.

Pateno Payments, which is an investor in Bitvo, has cancelled the purchase transaction it had been discussing with FTX Canada and FTX Trading in accordance with the terms of the agreement. Pateno Payments is a stakeholder in Bitvo. This information was disclosed by Bitvo on November 15th.

The business has made it abundantly obvious that its operations have not been hampered in any way, noting the fact that Bitvo does not have any substantial exposure to FTX or any of the associated organisations of that corporation as supporting evidence. Normal operations are being carried out across the board for all areas of trading on Bitvo, including deposits and withdrawals.

In addition, Bitvo emphasised that it is not a party to the bankruptcy processes that FTX and its linked enterprises have launched. Bitvo noted that FTX and its connected firms have initiated these procedures. According to the press release, Bitvo has never owned, listed, or traded the FTX Token (FTT) or “any related token.”

According to the company, “Bitvo has functioned as an independent, Canadian crypto asset trading platform ever since the company’s establishment.” The corporation continued by stating that the website has not been operating as a lending or borrowing service for some time:

Because Bitvo maintains a healthy reserve at all times, the business does not provide credit to its clientele in the form of loans. This is how Bitvo has conducted business from the very beginning, and it is a necessity of Bitvo’s regulatory status as a Restricted Dealer registered with the Canadian Securities Administrators. Bitvo has always functioned in this manner. Bitvo has always made the decision to run its business in this fashion.

A previous article published by Cointelegraph said that the financially troubled cryptocurrency exchange FTX has entered into a deal to purchase Bitvo in June 2022. This was done as part of the company’s plans to expand its operations in Canada. However, things did not go according to plan when FTX became involved in a major crisis in the financial sector. This occurred after it was discovered that the exchange had improperly used the money of its customers to engage in trading on its sister company, Alameda. This caused FTX to become embroiled in the crisis.

Bitvo released an official declaration on November 14 noting that the acquisition of the firm by FTX was still a pending agreement that had not yet been finalised and that the transaction was not yet complete. As stated in the announcement issued by the company, “Digital assets are stored with independent third parties BitGo Inc. and BitGo Trust Company,” and more than eighty percent of the assets are held in cold storage.

Pamela Draper, the CEO of Bitvo, said to Cointelegraph that the firm is happy that the merger did not proceed because “it would have been terrible to our workforce and just as critically, our users.” She went on to clarify that the process that took place between the announcement of the agreement in June and its conclusion needed working to fulfil the closing conditions, and that this was something that took place between the months of July and September. The regulatory permission was the element that was considered to be the most significant.

According to Draper, “The Alberta Securities Commission is our main regulator, and Bitvo and FTX were working with them to gain the appropriate permissions.” FTX and Bitvo were working with them to obtain the requisite approvals. The Alberta Securities Commission is the primary regulating body for our industry.

Even though it seems like Bitvo was able to back out of the agreement, there are a few crypto firms that have been harmed by the FTX problem as a consequence of being bought by the crypto billionaire. These companies include Bitvo.

The cryptocurrency exchange Liquid, which is owned by FTX and made public on November 15, according to an official statement that was made public that day, has suspended its fiat and cryptocurrency withdrawals on its Liquid Global platform in connection with FTX’s issues. FTX’s problems were made public on November 15. FTX successfully finalised the purchase of the Japanese exchange as well as the firms that were linked with it in February of 2022.

Following the filing of Chapter 11 by FTX and FTX US, the insolvent cryptocurrency lender Voyager Digital took to Twitter on November 16 to provide its customers with an update on the reorganisation efforts. In the tweet, Voyager Digital informed its customers that the customer vote will be cancelled and that the proposed sale will not move forward. The bankruptcy petition for Voyager was filed in July 2022, and FTX US purchased its assets in September of the same year.

FTX US Derivatives, a subsidiary of FTX US that was formerly known as LedgerX, has continued to provide fully-collateralized swaps, futures, and options on cryptocurrency, according to comments made by CEO Zach Dexter on November 14. FTX US Derivatives is a company that was formerly known as LedgerX. During the course of this conversation, he also brought up the fact that LedgerX was omitted from the bankruptcy file that was submitted by FTX. Dexter emphasised in yet another tweet that was sent out on Monday that “client money are secure on the LedgerX LLC derivatives platform, which remains open 24 hours a day, seven days a week.” As was previously reported, FTX US completed the acquisition of LedgerX in the month of August 2021 in a deal that was kept discreet.

LedgerX, Other Assets Sold By Bankruptcy Court For FTX

The court who is in charge of monitoring the bankruptcy proceedings for FTX has allowed the troubled cryptocurrency exchange permission to liquidate some of its assets in order to assist it in its attempts to repay its creditors.

In a file that was made in the Delaware Bankruptcy Court, it was stated that Judge John Dorsey had given his approval for the sale of four important components of FTX. The assets include of the derivatives platform LedgerX, the stock-trading platform Embed, and its regional subsidiaries, FTX Japan and FTX Europe.

Those who are interested in placing an offer may now get in touch with the investment firm Perella Weinberg, which has been given the responsibility of initiating the sale process and representing FTX and its assets.

At the beginning of this week, 117 different parties indicated that they were interested in acquiring the FTX assets that are now up for sale. On December 15th, attorneys for FTX began the process of petitioning the court for authorization to sell the four units, noting the possibility of a decrease in the value of the properties.

At the moment, FTX Europe has had its licenses terminated, while FTX Japan has been hit with orders to cease its commercial operations.

Based on the most recent FTX lawyer Andy Dietderich, the troubled cryptocurrency exchange has apparently recovered something in the neighborhood of $5 billion dollars worth of cash and coins. The legal counsel for FTX said that despite the fact that the exchange has succeeded in recouping some assets, the cryptocurrency platform is still in the process of reassembling its transaction history.

As John Ray took over as CEO of FTX worldwide, the previous CEO said that the company had $8 billion in assets.

The former CEO of FTX, Sam Bankman-Fried, who has pleaded not guilty to all of the criminal allegations against him, has said that he did not steal cash nor hide billions of dollars. Bankman-Fried also said that he was willing to utilize his own personal assets to contribute to the task of compensating users, and he made this vow during his statement.

Google, UK, FTX and Binance in Crypto News

In the latest crypto news, Google has expanded its Web3 program by adding 11 blockchain partners to its Google for Startups Cloud Program. The program will provide expertise, grants, and services to emerging Web3 entrepreneurs. The UK government has also allocated $125 million to establish an AI task force aimed at promoting the country’s sovereign capabilities, such as public services, and fostering the adoption of safe and reliable AI foundation models. On the other hand, FTX has agreed to sell its LedgerX futures and options exchange and clearinghouse to M7 Holdings for $50 million, while Binance.US has backed out of its $1 billion Voyager asset purchase due to the “hostile and uncertain regulatory climate in the United States.”

In more detail, Google has partnered with 11 Web3 blockchain firms, such as Alchemy, Polygon, Celo, and Hedera, to expand its Google for Startups Cloud Program. As part of the program, pre-seed Web3 startups can receive up to $2,000 in Google Cloud credits valid for two years, while seeded startups can access $200,000 over two years for Google Cloud and Firebase usage. Additionally, blockchain partners are offering grants of up to $3 million to seeded companies in the program. Nansen, a blockchain analytics company, has also partnered with Google Cloud to provide real-time blockchain data for startups.

Meanwhile, the UK government has launched an AI task force to accelerate the country’s readiness for AI. The task force will focus on promoting sovereign capabilities, such as public services, and fostering the adoption of safe and reliable AI foundation models. The task force aims to launch its first pilots of AI usage and integration targeting public services in the next six months. The UK is committed to becoming a science and technology superpower by 2030 and is pushing for “safe AI” that regulates technology to “keep people safe” without limiting innovation.

In terms of cryptocurrency exchanges, FTX has agreed to sell its LedgerX futures and options exchange and clearinghouse to M7 Holdings for $50 million. The deal is subject to approval from the US Bankruptcy Court for the District of Delaware, which is scheduled to hear the case on May 4. FTX purchased LedgerX in August 2021 to expand its spot trading services, and the sale is part of FTX’s efforts to monetize assets and deliver recoveries to stakeholders.

On the other hand, Binance.US has backed out of its agreement to purchase bankrupt cryptocurrency brokerage Voyager Digital’s assets for $1 billion, citing the “hostile and uncertain regulatory climate in the United States.” The Voyager Official Committee of Unsecured Creditors expressed its disappointment at the news and said it was investigating potential claims against Binance.US. Voyager and the creditors’ committee will now work on distributing cash and crypto to customers directly via the Voyager platform.

In conclusion, the crypto world has seen significant developments this week, from Google expanding its Web3 program to the UK government allocating funding for an AI task force. FTX is set to sell LedgerX, and Binance.US backs out of the Voyager asset purchase. The industry remains dynamic and unpredictable, with companies and governments adapting to the ever-changing regulatory environment.

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