Cryptocurrency News: $55M of NFT Collateral Faces Liquidation, FTX Revenue Up 1,000%| Investor’s Business Daily

Cryptocurrency News: Top crypto news for Monday shows roughly $55M of NFTs face liquidation amid the BendDAO debt crisis. Looking ahead, Ethereum’s largest mining pool will shut down once its move to a proof-of-stake model completes on Sept. 15. Over the weekend, CNBC reported that crypto exchange FTX saw its revenue skyrocket 1,000% in 2021.

Click here to jump to more on today’s Cryptocurrency News.

Cryptocurrency Price Action

Bitcoin is below $21,300 as of Monday morning, it’s lowest level since the end of July. The world’s largest cryptocurrency tumbled all last week after nearly hitting $25,000 on July’s better-than-expected inflation report from earlier this month. But missed retail sales, Federal Reserve plans to continue rate hikes and central bank discussions over crypto risk and regulation wiped out those gains. Bitcoin has been trending higher. The currency gained 16.8% in July, it’s best monthly performance since October 2021. But it remains far below its November peak and the latest dips continue to cut into its rebound.

Ethereum shed $80 overnight Sunday and traded around $1,570 early Monday. ETH climbed last week and hit $2,000 – it’s highest level since late May – after successfully transitioning its Goerli network to proof-of-stake earlier this month. Goerli marked the final test network before the official merge to a PoS blockchain, which was expedited to September 15. But the price of Ethereum has fallen along with the recent dip in the broader crypto markets.

Most Popular Cryptocurrencies

Scroll down for more cryptocurrency news and price updates.

Digital asset investments are extremely volatile. While cryptocurrency’s fundamentals and technical indicators may differ, investors should focus on the same key objectives. First, stay protected by learning when it’s time to sell, cut losses or capture profits. Second, prepare to profit if the cryptocurrency starts to rebound.

Despite their original promise, cryptocurrencies haven’t acted as hedges against inflation. Instead, they’ve trended with the broader indexes. Read The Big Picture and Market Pulse to track daily market trends.

View IBD’s Best Cryptocurrencies And Crypto Stocks To Buy And Watch page to help navigate the world of digital asset investments.

Want a deeper dive into crypto? Check out the What Is Cryptocurrency? explainer page.

NFT Collateral Collapse

Millions of dollars of Bored Ape Yacht Club, CryptoPunks and CloneX NFTs risk liquidation as BendDAO faces a debt crisis. BendDAO is a peer-to-peer lending service that allows users to borrow Ethereum against their non-fungible tokens.

Loans are typically 30% to 40% of a NFT collection’s floor price, or the minimum purchase price on the open market, and customers put up their NFTs as collateral. BendDAO calculates the health of the loan based on the floor price of an NFT collection and how much is still owed. If the floor price falls too close to the amount of the loan, it encroaches on a liquidation threshold and BendDAO will auction the NFT to recoup the debt.

BendDAO will automatically put collateralized NFTs up for auction if their “health factor” falls below 1.2, and could liquidate them completely if it falls below 1. In that scenario, borrowers have 48 hours to repay their loans or risk losing their NFTs. And it’s starting to play out.

The price of Bored Ape NFTs fell below 70 ETH in August from about 153 in May.  Some crypto analysts estimate there are roughly $55 million worth of NFTs at risk of liquidation. Currently, there are dozens of Bored Apes, Mutant Apes and CloneX NFTs that have health factors under 1.2, according to BendDAO’s auction page. But a majority that defaulted have no bids. As things stand, NFT borrowers will need to pay 100% interest on their loaned ETH. And BendDAO is deciding on changing its terms to incentivize bids and make it easier to sell the defaulted NFTs.

Ethermine Ends Mining

Ethermine, the largest ethereum mining pool, will phase out operations with the company’s transition to a proof-of-stake consensus. The pool announced that it will no longer be possible to mine ethereum once the merge is completed on September 15 and the pool will switch to withdrawal-only mode to payout miners. Bitfly, which operates Ethermine, will not support any proof-of-work fork for the ethereum merge and recommends miners join another one of its pools, according to the company announcement.

FTX Revenue Up 1,000%

FTX thrived during the onset of the crypto winter while so many projects are still struggling to survive. The cryptocurrency exchange’s revenue skyrocketed more than 1,000% in 2021, according to internal financial documents obtained by CNBC. FTX’s revenue grew to $1.02 billion last year from $89 million in 2020, and net income grew to $388 million from $17 million during the period.

FTX recorded $270 million in revenue for the first quarter of 2022 and is on track to hit $1.1 billion for the year. CEO Sam Bankman-Fried confirmed the numbers on Twitter, saying they’re in the “correct ballpark.”

Meanwhile, other crypto exchanges have faced heavy losses from the falling price of bitcoin and other cryptocurrencies. Coinbase recently posted a $1.1 billion loss for its second quarter, compared to $1.6 billion in net income the year prior.

Earlier Crypto News

An Epic Grant for Animoca Subsidiary

Grease Monkey Games, an Australian subsidiary of blockchain video game maker Animoca Brands, received a MegaGrant from Cary, N.C.-based creators of Fortnite, Epic Games. Grease Monkey will use the grant to support its Torque Drift 2 motorsport game, which is currently under development.

Epic Games MegaGrants range from $5,000 to $500,000 and cover game development, architecture projects, film production, academic uses and software development for projects using its proprietary Unreal Engine. Unreal Engine is a suite of 3D creation tools for game development, television content creation and model visualization. The total amount to Grease Monkey wasn’t disclosed, but it plans to use the funds to develop new drift physics for the upcoming game.

Cryptocurrency Donations Aiding Ukraine

Cryptocurrency donations aiding Ukraine’s defense against Russia reached $54.57 million, Ukrainian Vice Prime Minister Mykhailo Fedorov tweeted Wednesday. The funds were donated to Ukraine’s government-run initiative, Aide For Ukraine.

According to Aid For Ukraine, crypto donations included 10,190.84 Ethereum, 595.44 Bitcoin, 10,435,120 USDT, 435,645.14 Polkadot, 2,231,824 USDC and 7,874.76 Solana tokens.

Ukraine purchased a variety of military gear and equipment with the funds. The country spent $11.88 million on UAVs, $6.9 million on armor vests, $5.7 million on computer hardware and software, $5 million on weapons requested by the Ministry of Defense and $5.25 million on its worldwide, anti-war media campaign.

Federal Reserve Notes Digital Asset Risk, Need For Regulation

On Wednesday, the Federal Reserve released minutes from the Federal Open Market Committee’s July 26-27 meeting. The committee members noted concerns over digital assets and the need for regulations to limit systemic risk.

“Declining risk appetite has also led to sharp declines in the price of some digital assets,” the committee noted. The Fed discussed issues regarding digital asset volatility as well as the financial stability of stablecoins and their rapid growth.

“These assets, including stablecoins, were subject to vulnerabilities—such as runs, fire sales, and excessive leverage—similar to those associated with more traditional assets,” staff noted.

While the recent turmoil in digital asset markets has not spread to other asset classes, its rising importance and interconnectedness with the financial system poses greater risk, the committee says. It underscores “the need to establish a robust supervisory and regulatory framework for this industry that would appropriately limit potential systemic risks,” the minutes note.

A few participants mentioned the need to strengthen oversight and regulation of some non-bank institutions. That would likely include exchanges such as Coinbase (COIN), which is currently under investigation by the SEC.

Tornado Cash Ban Raises Questions In Crypto Community

Ethereum mixing service Tornado Cash was sanctioned by the U.S. last week for laundering $7 billion since 2019. Tornado Cash is a privacy tool that mixes digital addresses so transactions can’t be traced. The sanctions banned all of the service’s activities and issued heavy consequences for anyone sending or receiving transactions through Tornado Cash. Now the cryptocurrency community is wrestling with a major question: Should decentralized networks come under regulation?

Read More Cryptocurrency News