This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.

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One of FTX founder Sam Bankman-Fried’s former confidants and roommates is said to be engaging with the U.S. attorney’s office in the Southern District of New York with the hope of getting a plea agreement, according to Bloomberg. Nishad Singh, FTX’s former director of engineering, is said to have met with prosecutors in a "proffer session." Such meetings often include an offer of "limited immunity" to encourage the interviewee to speak freely. Singh hasn't been accused of wrongdoing. Central to Singh’s deal is information on FTX’s and Bankman-Fried’s large donations to political campaigns, according to Bloomberg, which cited people familiar with the matter. Singh personally has donated more than $9.3 million to Democratic Party-aligned initiatives since 2020.

After days of muted trading and crushed volatility, the crypto market came back swinging this week, as cryptocurrencies with smaller market capitalizations rallied, outperforming bitcoin and ether. Among the biggest gainers was FTT, the token of the FTX crypto exchange that failed spectacularly in November, jumping 55% on Monday, although it's still down 96% over the past year. Serum (SRM), the native token of the Solana-based decentralized exchange, surged 28%. ZIL, the Zilliqa blockchain project’s native token, increased 37%, while the native token of the Aptos blockchain, APT, known for its rocky launch and venture-capital backing, gained 40% on Tuesday.

Coinbase’s (COIN) premium brand as an onshore and regulated entitywith a healthy balance sheet should enable the crypto exchange to weather the fallout from the collapse of rival FTX, JefferiesGroup said in a research report Monday. Still, the broker initiated coverage of the stock with a hold rating and $35 price target, citing concerns about the broader crypto market. “The fallout from FTX has called into question the safety, security and legitimacy of the broader crypto ecosystem,” Jefferies said. Traders appear to be focused on Jefferies' positive comments as Coinbase's shares rose 14% in early trading Tuesday to $37.94.

Chart of the Day

• The chart shows a three-axis framework, calling for crypto projects to deliver use cases beyond pure finance as the industry tries to rebalance.
• "DeFi (decentralized finance) should be relegated to an infrastructure layer that supports and enhances the value created on blockchains. The industry needs to rebalance away from capital allocation uses (trading, leverage, borrowing/lending) to value-creating uses (Web3, gaming, storage, logistics)," Ilan Solot, co-head of digital assets at Marex Solutions, a derivatives products business, said.

– Omkar Godbole

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