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Crypto exchange FTX gets nod to sell 3M of assets to repay creditors

Bitwise

Nearly $700 million of the $873 million trust assets allowed to be sold by FTX comes from Grayscale’s flagship product, the Grayscale Bitcoin Trust, or GBTC.

Bankrupt crypto exchange FTX has been given the green light to sell around $873 million of trust assets, with proceeds used to repay creditors impacted by the exchange’s collapse in 2022, according to a Nov. 29 filing in a Delaware bankruptcy court.

The $873 million in assets will be sourced from FTX’s stakes in various trusts issued by crypto asset manager Grayscale Investments, valued at $807 million, and custody service provider Bitwise — valued at $66 million.

While the court document references a total of $744 million in assets — this is due to the valuation figure being as of Oct. 25, 2023. The assets have increased in value since.

*Order authorizing FTX Trading to sell trust assets. Source: Kroll*

The approval comes nearly four weeks after FTX debtors filed a motion to Judge John Dorsey on Nov. 3 requesting the sale of the six cryptocurrency trusts — including the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Bitwise 10 Crypto Index Fund (BITW).

FTX currently owns over 22 million units of GBTC, Grayscale’s flagship Bitcoin product, now worth $691 million, while its 6.3 million shares of ETHE are now worth around $106 million.

Grayscale’s Ethereum Classic Trust (ETCG), Litecoin Trust (LTCN) and Digital Large Cap Trust (GDLC) are the three other trusts that FTX can now sell to recoup funds for impacted FTX customers.

*FTX's shares in Grayscale and Bitwise were worth $744 million as of Oct. 25, but the valued has increased since. Source: Kroll*

FTX’s administrators, headed by John. J Ray III, has been working to recover assets since Sam Bankman-Fried’s former empire collapsed in November 2022.

So far, around $7 billion in assets has been recovered, with nearly half of that coming in the form of cryptocurrencies ($3.4 billion).

In June, FTX’s debtors estimated the total amount of customer assets misappropriated was $8.7 billion.

Meanwhile, Bankman-Fried was convicted on seven fraud-related charges on Nov. 2 and is set to be sentenced on March 28.

He remains in Brooklyn’s Metropolitan Detention Center for the time being, where he recently paid four mackerels in exchange for a haircut.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

XRP spike on hoax filing a ‘bad look’ but won’t sway SEC’s ETF approvals

November 15, 2023 Coin Telegraph

blackrock

Bloomberg ETF analyst Eric Balchunas doubts the SEC will deny ETFs after XRP’s price spiked on a faked BlackRock XRP trust filing, but it is a “bad look.”

The Nov. 13 XRP (XRP) price action stemming from a falsified BlackRock XRP trust filing shouldn’t sway the United States securities regulator’s decision to approve or delay spot Bitcoin (BTC) exchange-traded funds (ETFs) — but it isn’t a good look, say industry observers.

The Securities and Exchange Commission has previously claimed the Bitcoin market can be manipulated and has knocked back spot Bitcoin ETFs, citing a lack of market manipulation controls.

Bloomberg ETF analyst Eric Balchunas told Cointelegraph the fake XRP filing should have little to no impact on the SEC’s final decision.

“We doubt this will impact the situation with spot Bitcoin ETFs,” Balchunas said. However, he added the incident could validate the SEC’s beliefs.

“There’s no doubt it is a bad look that arguably validates the ‘fraud and manipulation’ that the SEC used as grounds for past denial.”

The Nov. 13 filing on the Delaware list of corporations website showed BlackRock creating the “iShares XRP Trust” — a precursor to launching an ETF.

The filing resulted in XRP spiking 12.3% in 30 minutes before it tumbled back down just as quickly once the filing was outed as a hoax by Balchunas and others who received BlackRock’s confirmation that the filing was made by someone posing as its managing director Daniel Schwieger.

Michael Bacina, a partner at the law firm Piper Alderman and chair of the industry group Blockchain Australia, told Cointelegraph he would be “surprised” if the SEC used the incident to postpone ETF applications.

“It’s unlikely an isolated rumor such as this would provide a legal basis for delaying ETF applications already being considered, particularly where they are already subject to deadlines,” he said.

The amount of lying, rumormongering and brazen attempts at market manipulation wrt to #Bitcoin, $XRP, $ETH, $SOL and more as if pertains to ETF news is enough to deny all applications currently pending.

This isn't a real market.
It is fraud flea market.
The SEC should hammer it.
— Parrot Capital (@ParrotCapital) November 14, 2023

Lucas Kiely, the CEO of wealth management platform Yield App, said the faked XRP filing wouldn’t sway the SEC and stressed the crypto community should “calm down.”

“It is highly unlikely that this incident will play any role in that decision,” Kiely sa.

He iterated that many X (formerly Twitter) pundits have posted fear-mongering headlines to capture audience attention and “spoof the markets.”

“Overall, this is a keep-calm and carry-on moment for the industry and likely a mild amusement for BlackRock.”

XRP filing ‘could easily undermine’ ETF efforts

The SEC has rejected several spot Bitcoin ETFs in the past on claims that investors aren’t protected from “fraudulent and manipulative acts and practices,” argues James Edwards, a crypto analyst at Australian fintech firm Finder.

There’s no reason to suggest it will detract from that view, Edwards claimed.

“Unfortunately, events like these could easily undermine efforts to launch a Bitcoin ETF in the U.S.,” Edwards said.

“The onus will be on ETF applicants like BlackRock to demonstrate that they are somehow able to protect clients from market manipulation and fraud, which is difficult given the opaque nature of crypto markets.”

The fake XRP trust filing will be referred to the Delaware Department of Justice for further investigation.

LATEST ON FAKE XRP ETF FILING: "Our only comment is that this matter has been referred to the Delaware Department of Justice," the spokesperson (for Delaware Dept of State) said. Damn. Someone out there is crapping their pants as we speak.. https://t.co/Xea226Q1vT
— Eric Balchunas (@EricBalchunas) November 14, 2023

BlackRock filed for a spot Ether ETF on Nov. 9. It is now awaiting regulator approval in addition to its spot Bitcoin ETF filed in June.

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FTX Foundation staffer fights for $275K bonus promised by SBF

November 14, 2023 Coin Telegraph

FTX Foundation staffer fights for 5K bonus promised by SBF

Alameda Research

FTX Foundation employee Ross Rheingans-Yoo said he was not part of Sam Bankman-Fried’s “inner circle” and knew nothing about FTX’s fraud.

An employee of FTX’s charity wing recruited by FTX co-founder Sam Bankman-Fried is trying to get paid $275,000, the remainder of his claimed 2022 salary bonus.

Ross Rheingans-Yoo's lawyers argued in a Nov. 13 court filing that only $375,000 of his $650,000 bonus was paid by FTX. They claim the remaining funds were owed when the crypto exchange filed for bankruptcy in November 2022.

Rheingans-Yoo’s latest filing comes in response to FTX’s objection filed on Oct. 30.

*Excerpt of Ross Rheingans-Yoo’s Nov. 13 response to FTX Debtor’s objection. Source: Kroll*

Rheingans-Yoo shared part of a Google Doc created by Bankman-Fried that laid out his employment terms at the FTX Foundation, which came with a $100,000 base salary. He claimed Bankman-Fried told him in memo

Rheingans-Yoo iterated he was not part of Bankman-Fried’s “inner circle” and wasn’t aware that FTX misappropriated customer funds with his lawyers adding:

“Instead, Rheingans-Yoo was a faithful employee who found himself in a mess he did not create.”

Rheingans-Yoo claims he is entitled to a further $650,000 specifically to donate to charity, a prepetition salary payment of about $5,700 and a post-petition salary of at least $62,800.

Advisers claim FTX has already fully paid Rheingans-Yoo his bonus because he elected to have the award partially repaid via options in the firm’s corporate affiliates before it filed for bankruptcy.

However, Rheingans-Yoo denies that claim.

The fate of Rheingans-Yoo’s bonus will be determined by a Delaware bankruptcy judge who is overseeing FTX’s Chapter 11 bankruptcy.

FTX sued Rheingans-Yoo’s Latona Biosciences Group, Bankman-Fried and several other defendants in July to return $71.6 million in investments and donations allegedly sent to various life science companies.

FTX seeks to recover through avoidance of transfers of $71.5m from

Life Sciences, Lumen Bioscience, GreenLight Biosciences Holdings, PBC, Riboscience, Genetic Networks, 4J Therapeutics, Latona Biosciences, FTX Foundation, SBF, Ross Rheingans-Yoo and Nicholas Beckstead pic.twitter.com/T7lF3sZmzN
— Sunil (FTX Creditor Champion) (@sunil_trades) July 20, 2023

The crypto exchange claims Rheingans-Yoo and Bankman-Fried personally benefited from the investments and donations but FTX and Alameda Research did not.

“Each of these transfers was made with the intent to hinder, delay, or defraud present or future creditors, a fact known by the FTX Foundation, Latona, and Bankman-Fried.”

Rheingans-Yoo claims his work at Latona, which involved analyzing potential recipients, speaking with their founders and executives and conducting due diligence, would’ve produced “positive results for society.”

Magazine: Can you trust crypto exchanges after the collapse of FTX?

BlackRock’s spot Ethereum ETF plan is confirmed after Nasdaq filing

November 9, 2023 Coin Telegraph

19b-4 Form

Earlier in the day, BlackRock registered corporate entity “iShares Ethereum Trust” in Delaware, the first hint that a filing for a spot Ethereum ETF filing was imminent.

Blackrock’s plans for a spot Ethereum exchange-traded fund (ETF) has now been confirmed, per a 19b-4 form filing submitted to the United States Securities and Exhange Commission on Nov. 9.

Nasdaq filed the 19b-4 form to securities regulator on behalf of the $9 trillion asset management firm for a proposed ETF called the "iShares Ethereum Trust."

The move signals BlackRock’s intention to expand beyond Bitcoin with its ETF aspirations.

*NASDAQ's 19b-4 filing to the SEC for BlackRock's iShares Ethereum Trust. Source: NASDAQ*

Earlier on Nov. 9, it emerged that BlackRock registered corporate entity iShares Ethereum Trust in Delaware, the first hint that a spot Ethereum ETF filing could be imminent.

UPDATE: BlackRock #Ethereum ETF confirmed. They just submitted a 19b-4 filing with Nasdaq pic.twitter.com/pLhuhhK7jo
— James Seyffart (@JSeyff) November 9, 2023

BlackRock and other financial firms have expressed interest in cryptocurrency-backed ETFs over the last few months.

Bloomberg ETF analyst James Seyffart noted that there are at least five firms in the running to win the Securities and Exchange Commission’s approval for a spot Ethereum ETF.

Among them are VanEck, ARK 21Shares, Invesco, Grayscale and Hashdex.

There are 5 other live spot Eth filings that i'm aware of:@vaneck_us @ARKInvest/ @21Shares @hashdex @InvescoUS/ @galaxyhq
andddd @Grayscale's filing to convert $ETHE.

In no particular order.
— James Seyffart (@JSeyff) November 9, 2023

Ether (ETH) spiked 8.9% to $2080 on the news that BlackRock is moving forward its plans for an iShares Ethereum Trust and is up 10.1% over the last 24 hours, according to CoinGecko.

*ETH’s change in price over the last 24 hours. Source: CoinGecko*

The price surge has helped ETH claw back some market dominance against Bitcoin (BTC), which has outperformed ETH in recent months.

ETH’s market dominance now sits at 17%, up 1.3% percentage points prior to the news.

Magazine: Bitcoin ETF: Wall Street’s Path to Crypto

ARK’s amended spot Bitcoin ETF filing is a ‘good sign’ of future approval

October 12, 2023 Coin Telegraph

21shares

ARK Invest and 21Shares amended spot Bitcoin ETF filing seemingly addresses earlier concerns highlighted by the SEC, which is a good sign of progress, according to Bloomberg's ETF analysts.

A recent amendment to ARK Invest and 21Shares’ joint spot Bitcoin (BTC) exchange-traded fund (ETF) application could be seen as a “good sign” of progress and impending approvals.

An amended Oct. 11 filing to the Securities and Exchange Commission for approval adds additional information about the proposed spot Bitcoin ETF, including practices for how the fund will custody assets and determine asset values.

Bloomberg senior ETF analyst Eric Balchunas said the changes could be in direct response to concerns the SEC has asked ETF issuers to address.

“It means ARK got the SEC's comments and has dealt with them all, and now put [the] ball back in [the] SEC's court,” Balchunas said. “[In my opinion] good sign, solid progress.”

There's 5 extra pages in new S-1 but the new stuff is sprinkled throughout like the two above egs. So what does this mean? It means ARK got the SEC's comments and has dealt with them all, and now put ball back in SEC's court. IMO good sign, solid progress.
— Eric Balchunas (@EricBalchunas) October 11, 2023

Balchunas said the changes are “sprinkled throughout,” making the new filing five pages longer, adding in a separate post that “none of the comments were that new or insurmountable.”

Changes included ARK noting the fund’s net asset value (NAV) calculations are not in line with the Generally Accepted Accounting Principles (GAAP) — an accounting standard used by the SEC, said Balchunas.

The new filing also clarifies the ETFs assets, held by Coinbase Custody, are in “segregated accounts [...] And are therefore not commingled with corporate or other customer assets."

This is also new (and again something we heard SEC asked about): "The Trust’s assets with the Custodian are held in segregated accounts on the bitcoin blockchain, commonly referred to as “wallets,” and are therefore not commingled with corporate or other customer assets." pic.twitter.com/57TmnNi1lE
— Eric Balchunas (@EricBalchunas) October 11, 2023

Fellow Bloomberg ETF analyst James Seyffart added in and X post the latter change signals that ARK and others are communicationg with the SEC about what the regulator wants cleared up.

“Good sign for future approval IMO,” he added.

Van Buren Capital general partner Scott Johnsson noted another new addition was a comment that if BTC is increasingly used for illegal purposes and if Bitcoin mining’s environmental impact causes it to be restricted then the ETF’s value could fall.

Still chuckling a bit at this “electricity usage” risk factor. Ark couldn’t even be bothered to put in a coherent header summary or more than a couple short sentences. You know the convo w/ the SEC was like “oh yea, good call Mr. SEC attorney, this is definitely material /s” https://t.co/unIArFDKl8
— Scott Johnsson (@SGJohnsson) October 12, 2023

Johnsson said based on ARK’s amendments it “doesn't look like the agency is putting up any unnecessary roadblocks via disclosure review.”

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filing

XRP filing ‘could easily undermine’ ETF efforts

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