🐻 Beware 🚨 more dominoes to fall

GM, this is Web3 Seems Legit, the weekly crypto and web3 newsletter for people who are still here. Don't be shy and say GM back!

Brace yourself for the week because things could get a lot uglier. In this issue:

• Why are all eyes on DCG/GBTC? As if things weren't bad enough already, it's about to get a lot worse with the potential trouble brewing at DCG, who owns major companies like GBTC and Genesis.

• Details of the FTX bankruptcy filing and more. The FTX bankruptcy files have been released, giving details into the completely illegitimate company SBF was running.

• Could celebrities be in trouble for FTX? A lawsuit has been filed against multiple major celebrity names for their role in promoting FTX. Will anything actually come of it?

Why are all eyes on DCG/GBTC?

Last week, Genesis Trading, one of the largest institutional market makers announced the suspension of withdrawals from its lending arm. In an attempt to save their firm, WSJ reported that they are looking to raise a $1 billion emergency loan from investors.

This is serious stuff. Genesis has deep ties with many CeFi platforms and institutions. But what's more concerning is the fact that Genesis is owned by DCG, a large holding company that owns some of the biggest names like Grayscale, Coindesk and Foundry.

While Genesis is the one raising emergency funds, it's been discovered that DCG, their parent company, actually owes them $1.1 billion. This hints that the liquidity crunch issue is far greater than Genesis and that this bailout could actually be to save DCG.

If DCG is in trouble, this means that all companies under their umbrella could also go under. This includes Grayscale Trust (GBTC) which holds about 633k Bitcoin. If GBTC is forced to sell their position, this could very well cause a crypto apocalypse.

To make us feel even better about the whole situation, Grayscale came out with a statement that they will not be sharing a proof-of-reserve due to "security reasons". In other words, "we're screwed".

What is Grayscale hiding? How bad is the situation really? Meanwhile, Coinbase is backing up the firm by "confirming" that they hold all of Grayscale's asset and that they are safe.

Thank god, now where's the actual proof?

Brace yourself folks, things could get a lot uglier.

Details of the FTX bankruptcy filing and more

Despite SBF telling journalists that his biggest regret was filing for Chapter 11 bankruptcy, nevertheless, the court case is moving forward. The 30-page FTX bankruptcy court filing opens with a statement made by John Ray III, the new FTX CEO tasked to clean up the mess. Here's what he had to say.

Now, this John Ray guy is highly experienced in helping companies, like Enron through their bankruptcy filings. So his strong words about FTX shouldn't be taken lightly.

Here are some other highlights from the FTX bankruptcy court files that reveal more gross details of the absolute clown show that SBF was running:

• Alameda (FTXs trading firm) gave SBF a $1 billion personal loan.

• SBF often used Signal app for messaging which automatically deletes conversations after a certain amount of time, leaving very few records to trace.

• FTX never had any board meetings. They were valued at $32 billion.

• There was no cash management system.

Meanwhile, speculation about who the FTX hacker is continues. Immediately after FTX filed for bankruptcy the other week, $650 million was mysteriously drained from the platform.

Rumors were circulating that it was an inside job done by SBF himself. Others were saying that it was the Bahamian SEC. However, on-chain sleuths believe that it's neither and that the hack, was indeed a hack.

We can speculate all we want, but the hacker is continuing to make moves with their stolen funds, causing everyone to be on high alert for potential dumping.

Could celebrities be in trouble for FTX?

A month ago, the SEC filed a lawsuit against Kim Kardashian for promoting the crypto asset, EthereumMax. Meanwhile, influencers and celebrities all looked the other way and pretended to not know a single thing about crypto.

Amazingly, the same thing is now happening with FTX.

It's undeniable that one of the reasons why FTX grew as big as it did was because it was heavily backed by some of the biggest celebrities. Surely, if all these influential stars trust SBF, there should be nothing to worry about, right?

Well, we were clearly wrong and investors are out for blood. Angry crypto investors have filed a class action lawsuit against SBF and a list of celebrities that promoted FTX. While many of these celebrities have yet to make a statement about their involvement with FTX, one individual has though - Kevin O'Leary, aka Mr. Wonderful.

It's amazing how FTX was able to bypass proper due diligence by all these major VC investors and celebrities. It's time to say goodbye to the speculative era of crypto and work on real-world applications 💪.

Meme of the week

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