Riding The Wave News Summary #70
Crypto firm FTX gets warning from FDIC to stop ‘misleading’ consumers about deposit protection, Many Bored Ape NFTs Are in Danger of Getting Liquidated as Borrowed Money Comes Back to Bite, & more
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Tweets
Crypto firm FTX gets warning from FDIC to stop ‘misleading’ consumers about deposit protection
Many Bored Ape NFTs Are in Danger of Getting Liquidated as Borrowed Money Comes Back to Bite
Bored Ape Yacht Club NFTs Ethereum Floor Price Drops to 8-Month Low
Tweets
Crypto firm FTX gets warning from FDIC to stop ‘misleading’ consumers about deposit protection
FTX, the crypto exchange controlled by Sam Bankman-Fried, received a cease-and-desist warning on Friday from the Federal Deposit Insurance Corporation, telling the company to stop “misleading” consumers about the insurance status of their funds.
The FDIC issued letters to five crypto companies, including FTX US. Unlike deposits held at U.S. banks, cryptocurrencies stored with brokerages are not protected by the government.
“Based upon evidence collected by the FDIC, each of these companies made false representations —including on their websites and social media accounts — stating or suggesting that certain crypto-related products are FDIC-insured or that stocks held in brokerage accounts are FDIC-insured,” the regulator said in a press release.
In addition to FTX US, the FDIC notified Cryptonews.com, Cryptosec.info, SmartAsset.com and FDICCrypto.com. The FDIC said the companies must “take immediate corrective action to address these false or misleading statements.”
Whenever you invest, it’s extremely important to keep track of whether the platform is insured in the case of bankruptcy, especially in crypto.
Many Bored Ape NFTs Are in Danger of Getting Liquidated as Borrowed Money Comes Back to Bite
Dozens of Bored Ape Yacht Club non-fungible tokens (NFT) purchased with borrowed money sit perilously close to being forcibly sold, and there's worry that could trigger even more liquidations.
The problem is brewing at BendDAO, a peer-to-peer lending service that lets users borrow ether (ETH) against their NFTs. Customers can typically take out a loan equal to 30% to 40% of the NFT collection’s floor price, or the minimum price to purchase one on the open market, with the NFT pledged as collateral.
Floor prices have tumbled in recent months, so much so that 45 of the 272 Bored Apes with BendDAO loans tied to them are now in the platform's “danger zone,“ when an NFT used as collateral is close to being auctioned off. In other words, $5.3 million worth of Bored Apes are at risk of being liquidated.
Most Bored Ape holders at risk of being liquidated bought their ape pictures months ago when the floor price was 125 ETH. It's since fallen to just above 70 ETH amid a broader NFT rout. Collectors who used their Bored Apes as collateral can simply pay off the loan plus interest to withdraw the NFTs from the site.
While this isn’t a major concern now, in the future bull runs, it may be as we could see a contagion effect similar to what we saw with this past bull run and lending yields.
Bored Ape Yacht Club NFTs Ethereum Floor Price Drops to 8-Month Low
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