CoinMarketCap News, Mar 9: Will Silvergate's Closure Hurt Bitcoin's Price for Long?

In some ways, the writing was on the wall for this story. Silvergate Bank is winding down and entering into voluntary liquidation. It's stressed that all deposits will be repaid in full. The crypto-friendly bank was a vital cog in the ecosystem and served as a fiat on-ramp for many businesses in the industry. But Silvergate was badly burned by the bear market and exposure to FTX. Bitcoin fell below $22,000 as investors digested the news — but some analysts believe it won't have an impact on prices in the long run. After SBF's crypto empire spectacularly collapsed, customers had rushed to pull their funds from Silvergate. That helped contribute to a painful $949 million loss in 2022.

Untangling the mess at FTX is getting expensive. New CEO John Ray, who charges $1,300 an hour as chief restructuring officer, billed a jaw-dropping $307,851 in February alone. And while some will argue this is value for money given his experience and track record, this is a bill that will be footed by FTX customers. That's just the tip of the iceberg. Sullivan & Cromwell, the main law firm working on the case, billed a jaw-dropping $16.8 million in January alone. Some of its partners charge an hourly rate of $2,165. Another big expense comes in the form of the consulting firm Alvarez & Marsal — their invoice came in at $12.3 million for the same month. With seven months left to go until SBF's criminal trial begins, the total cost of lawyering up could extend into many hundreds of millions of dollars.

In other developments, FTX's new management has also put forward a key employee retention plan that's designed to ensure critical workers won't jump ship to other companies. This is a common part of bankruptcy proceedings that has been seen with other crypto firms that have gone bust in recent months, but it still may rub salt in the wounds of creditors. Overall, FTX is now seeking court approval to award a total of $4 million to a small group of crucial personnel — with $1.4 million to be shared between 10 specific employees who are "key to the success" of the Chapter 11 case. It's argued this plan is necessary because 130 people have resigned from FTX since the bankruptcy, with many others now receiving less pay.

Meanwhile, there are rumblings that SBF's legal team could push for his criminal trial in October to be delayed. His lawyer Mark Cohen has written a letter to the judge to raise a number of concerns. A "substantial portion" of discovery is yet to be delivered to his client — and because SBF is forbidden from using virtual private networks, he's been unable to access FTX's transactional database. Cohen is now calling for key dates in the run-up to the trial to be pushed back. And he warned: "It may be necessary to request an adjournment of the trial, currently scheduled to begin on October 2, 2023. While we are not making such an application at this time, we wanted to note this issue for the court now in case we need to revisit this issue after receiving the additional discovery."

Leo Jakobson has written an in-depth piece summarizing the current state of play at FTX. From the criminal charges Sam Bankman-Fried faces, to the plea deals reached by his inner circle, it's a great read if you want to get up to date on the case. We also look at the separate lawsuits filed by the SEC and CFTC, how SBF's bail agreement has changed following some concerning infractions, and the battle to claw back missing billions for FTX customers.

The SEC's Gary Gensler has made his views on Ether crystal clear: it's a security, especially after the switch to Proof-of-Stake. But speaking before U.S. politicians, the chairman of the Commodity Futures Trading Commission has suggested he doesn't agree — and that the world's second-largest cryptocurrency should be regarded as a commodity. Both agencies have been stepping up the rhetoric as Washington decides how digital assets should be regulated. CFTC chair Rostin Behnam said he wouldn't have allowed ETH futures to be listed on exchanges unless it was certain they were commodities, adding: "We have litigation risk, we have agency credibility risk if we do something like that without serious legal defense or defenses to support our argument that that asset is a commodity."