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You are here: Home / Archives for ftx

ftx

G7 To Stricter Crypto Regulations While U.S. Govt Faces Criticism For Missteps

March 27, 2023 by Ammar Raza

The G7 major industrialized democracies reportedly plan to push for stricter cryptocurrency regulations. According to a report, officials with knowledge of the plan said that the G7 aims to increase business transparency and consumer protection in the crypto sector. 

The G7 will accelerate the pace of discussions towards a meeting of finance ministers and central bankers in mid-May, just before the summit in Hiroshima. However, the move follows the collapse of the major exchange FTX in November, which exposed the poor governance of the industry and sent shockwaves through financial markets. 

It also comes amid investor concerns about sudden bank failures in the U.S., which included Silicon Valley Bank and Signature Bank. The G7 is seeking to state its collective efforts in a leaders’ declaration, with Japan already having virtual currency regulations in place. 

The group is hoping to take the lead in formulating global standards, as the legal status of virtual assets and rules about them vary by country. Moreover, internationally, the Financial Stability Board and the International Monetary Fund have already released recommendations and policy papers on creating a regulatory framework for crypto assets. 

According to officials, IMF directors have generally agreed that virtual assets should not be granted official currency or legal tender status. Issues associated with crypto assets are likely to be on the agenda of the upcoming G20 meeting in Washington in mid-April.

Nevertheless, as of now, the legal status of virtual assets and rules about them vary by country. However, the G7’s move could potentially set a precedent for other countries to follow in the future.

U.S. Government’s Missteps In Crypto Regulation

While the G7 was busy with their planning, an intriguing debate emerged. The U.S. government’s recent attempts to regulate the cryptocurrency industry have come under fire from Keiko Yoshino, executive director of the Puerto Rico Blockchain Trade Association. 

Yoshino argues that recent directives from the Federal Reserve and executive branch designed to debank crypto firms, a pending lawsuit against the largest and most trustworthy U.S. exchange, Coinbase, and increasingly hostile rhetoric from Congress are far from appropriate.

Yoshino believes that the government has a role in overseeing the crypto industry, but recent regulatory announcements abuse power. She points out that crypto was born out of the financial crisis of 2008 and has emerged as an alternative to inflationary fiat currency. 

Yoshino argues that the government should not discourage banks from holding crypto or people from buying it if they want to. Instead, she believes the government should explore crypto as a potential alternative to fiat currency. 

She quotes Benjamin Franklin, who said:

Those who would give up essential Liberty to purchase a little temporary Safety deserve neither Liberty nor Safety.

Related Reading | Weekly Market Watch: Bitcoin & Ethereum’s Bullish Ride, Altcoin Follows Their Footsteps

Filed Under: News, World Tagged With: Cryptocurrency, ftx, g7, IMF

SushiSwap Faces A Double Whammy: SEC Subpoena & Market Cap Drop

March 25, 2023 by Mishal Ali

SushiSwap, the 142nd largest crypto asset by market cap, has been served with a subpoena by the U.S. Securities and Exchange Commission (SEC), according to a recent tweet from Santiment. This has caused some fear, uncertainty, and doubt (FUD) toward cryptocurrency, and its market cap has dropped as a result.

🍣 #SushiSwap was recently served an #SEC subpoena, and it has caused some #FUD toward the now 142nd largest #crypto asset by market cap. Our latest insight covers the dormant movement, capitulation, $SUSHI whale behavior, and plenty more. https://t.co/XzWMyGpY4r pic.twitter.com/SVPpxQmySM

— Santiment (@santimentfeed) March 24, 2023

SUSHI Protocol Usage Struggles

Santiment’s latest insight report has covered the recent dormant movement, capitulation, and $SUSHI whale behavior, among other factors. The report shows that SUSHI’s total value locked (TVL) has dropped by 93% since mid-November 2021, which coincided with the FTX saga period and is now sitting at $581.47 million USD TVL.

image 78
Source: defillama

While the falling price of crypto assets may affect TVL, it is also likely that people are using less of SUSHI and moving away from it. On the other hand, Uniswap’s TVL has dropped by 63% since mid-November 2021 and is now at $3.71 billion. According to Dappradar, its protocol usage has struggled for the past year.

image 79
Source: Dappradar

Looking at the number of unique active wallets (UAW) interacting with a dApp’s smart contracts, there have been occasional spikes. But overall, there has been little real growth as protocol usage, on average, remains pretty low. Meanwhile, on Uniswap, UAW has been increasing for the past year, indicating a healthy protocol.

After examining the SUSHI token movement, the report notes that long-term holders have been exiting their positions. The report shows that there have been notable movements since the start of the year, particularly in terms of Dormant Circulation (365), which shows the number of tokens that haven’t moved for at least 365 days.

Moreover, the recent spike in Dormant Circulation (365) coincides with a drop in SUSHI’s supply on exchanges, suggesting that long-term holders decided to exit their positions. Twitter user Lookonchain identified the fund Goldentree, which had previously invested $5.2 million in SUSHI in October 2022, as one of the investors exiting their position.

image 80
Source: Sanbase

Nevertheless, SUSHI’s market cap has been hit hard by the SEC subpoena and the recent movement by long-term holders. It remains to be seen how the cryptocurrency will fare in the coming weeks, but it’s clear that the protocol is facing some tough times. 

Related Reading | Binance Spot Trading Halts: Swift Response & Transparent Updates Eases Customer Concerns

Filed Under: News, Altcoin News Tagged With: Cryptocurrency, ftx, SEC, sushiswap

Bitcoin Dominance Surges As Ethereum Struggles To Keep Up: Kaiko’s Insights 

March 21, 2023 by Mishal Ali

The ratio of Bitcoin to Ether has reached its highest level since July 2022, as Bitcoin continues to outperform the broader cryptocurrency market. According to Kaiko Research’s report, BTC is currently trading at nine-month highs, up 30% over the past seven days. 

image 59

Investors are increasingly turning to Bitcoin in the spot markets and the perpetual futures market, as evidenced by a surge in open interest. The data shows $2.6 billion more in open positions in BTC than at the beginning of the week, indicating a significant influx of investment into derivative markets. 

The rise in open interest was driven by price effects and the opening of new contracts, as indicated by the increase in BTC open interest by over 50k in just one week. 

image 63

While ETH open interest only rose by $600 million, with an 18% increase compared to BTC’s 51% surge, suggesting that it struggled to gain as much momentum as BTC.

Bitcoin Rallies Amdist Market Uncertainty

The increase began after the USDC turmoil subsided and has continued despite ongoing stress in the banking sector and uncertainty around the Fed meeting. 

However, despite surging volumes, liquidity remains thin, with a 2% market depth for BTC-USD and BTC-USDT pairs hitting 10-month lows after Silvergate’s collapse, per the report. 

image 58

Depth dropped even lower than levels seen in the immediate aftermath of FTX, likely due to the closure of major on-ramps for crypto markets, which included Silvergate’s SEN payment network.

image 57

Meanwhile, the relevance of fiat versus stablecoin usage on centralized exchanges is on the rise. Presently, stablecoins dominate 78% of all trades on such exchanges, while only 19% are in fiat currencies. The remaining trade volume is divided between Bitcoin, Ethereum, and exchange tokens such as BNB. 

image 60

Additionally, as fiat on-ramps become scarcer, the market share of stablecoins is expected to grow, particularly on offshore platforms like Binance, which are already being disconnected from fiat payment rails. USDT accounts for 80% of all stablecoin-denominated trades. 

image 61

However, with every regulatory crackdown comes opportunity, particularly for regions abroad. The big question is whether Europe or APAC can replace some of the fiat payment rails that have been dismantled in the US. 

Moreover, the report revealed that in 2023, weekend liquidity management has also become a challenge for crypto markets, which operate 24x7x365 and struggle to match their needs with traditional financial institutions. 

image 62

On average, there was a 33% reduction in weekend trading volumes compared to weekdays, but this difference varied greatly among different exchanges. Nevertheless, the closure of two major crypto-friendly banks in the US is expected to worsen market fragmentation between these exchanges.

Related Reading |  Shytoshi Kusama Reacts To Shiba Inu-Themed Restaurant’s Live Broadcast

Filed Under: News, Bitcoin News Tagged With: Bitcoin (BTC), BNB, Ethereum (ETH), ftx, USDC

FTX Founders & Executives Receive Billions, Raising Concerns Over Recovery

March 17, 2023 by Mishal Ali

Cryptocurrency exchange FTX Trading Ltd and its affiliated debtors have submitted their Schedules of Assets and Liabilities and Statements of Financial Affairs for all entities involved in their Chapter 11 proceedings. It disclosed its financial affairs, revealing payments and loans made to its founders. 

According to the press release, the documents show that FTX founder Sam Bankman-Fried received $2.2 billion, with Nishad Singh and Zixiao “Gary” Wang also receiving significant payments of $587 million and $246 million, respectively. 

The figures offer a snapshot of the exchange’s financial position at the time of filing and raise questions about the exchange’s ability to recover. 

Additionally, Ryan Salame is also said to have received a whopping $87 million, while John Samuel Trabucco took home $25 million, and Caroline Ellison walked away with $6 million. 

The press release also claimed that these stated amounts don’t include expenses of over $240 million used for purchasing luxury properties in the Bahamas. Additionally, direct political and charitable donations made by the exchange Debtors and significant transfers to non-Debtor subsidiaries in other jurisdictions. 

While some of the properties are now under the control of the FTX Debtors or cooperating authorities, the eventual monetary recoveries and timing are unknown. The FTX Debtors are looking into potential legal action against those who received these transfers and subsequent transfers.

FTX Debtors have cautioned stakeholders against using their Schedules and SOFAs to estimate recoveries on claims. The reason is that they were prepared under Chapter 11 rules and did not comply with standard accounting principles. 

Thereby not providing a comprehensive view of their assets and liabilities. According to the press release, the debtors are actively working to identify all transfers, assets, and liabilities, including intercompany claims among their subsidiaries.

FTX CEO Accused Of Embezzlement & Facing Federal Charges

The prominent face and CEO of FTX, SBF, is currently facing a slew of federal charges related to the collapse of FTX. He is being accused of securities fraud and embezzlement of funds from the platform for personal gain. 

As for now, SBF was revealed to have received an impressive sum of $2.2 billion, which excludes $240 million allocated for “luxury property in the Bahamas,” “political and charitable donations,” and “substantial transfers” to its subsidiaries, it remains to be seen what impact these revelations will have on FTX’s future. 

Although it was once valued at $40 billion, FTX has faced a challenging year. SBF pleaded not guilty to the charges and is currently detained at their parents’ residence in California. His trial is scheduled for October.

Related Reading | BlackRock CEO Larry Fink: Beyond Bitcoin, The Rise Of Tokenization In Crypto

Filed Under: News, World Tagged With: ftx

FTX/Alameda’s $69M USDT Transfer To Coinbase, Binance, & Kraken Sparks Controversy 

March 15, 2023 by Ammar Raza

In a recent tweet by LookOnChain, it was reported that three addresses related to FTX/Alameda had transferred a whopping $69.64 million USDT to the address “0xad6e”.

The 3 addresses related to FTX/Alameda transferred 69.64M $USDT to the address "0xad6e", among which 43M $USDT was transferred to #Coinbase, #Binance and #Kraken.

And transferred 75.94M $USDC to #Coinbase Custody Wallet. pic.twitter.com/MqvCA87ItD

— Lookonchain (@lookonchain) March 14, 2023

Interestingly, $43 million USDT was transferred to three of the largest cryptocurrency exchanges, Coinbase, Binance, and Kraken. In addition, $75.94 million USDC was transferred to the Coinbase Custody Wallet.

According to sources, these transactions were made after the FTX/Alameda crash, which led to the consolidation of all assets at the three addresses mentioned in the tweet.

The transfer of such a huge amount has raised several questions among the crypto community. While some members believe that FTX is bullish on the market, others are skeptical about the intentions behind the transfer.

One member stated that the exchange’s latest activity suggests that they are dumping ETH, which seems to contradict the bullish sentiment. Another member criticized its alleged manipulation and questioned when they would face liquidation on leverage again.

There were also comments speculating about the person behind the transfer. Some speculated that it could be FTX’s CEO, Sam, who is known for his trading skills. They believe that Sam is trying to win back what was lost in the recent FTX/Alameda crash.

Nonetheless, the tweet has sparked a lot of interest and debate among crypto enthusiasts, with many eagerly awaiting further information.

Shaq Evading Service In FTX Class-Action Lawsuit

In other FTX-related news, Shaquille O’Neal, the former NBA star and celebrity endorser, is reportedly evading being served papers in a class-action lawsuit involving the collapsed cryptocurrency exchange platform FTX. 

The suit, filed in November by Oklahoma resident and the exchange retail investor Edwin Garrison, alleges that FTX deceived investors and that celebrity endorsers, including Shaq, failed to do their due diligence before promoting the company’s products. 

According to the report, Lawyers have had trouble reaching Shaq, who appeared in the exchange promotions and hosted a music festival sponsored by the platform. The plaintiff’s lawyers have sent multiple emails to Shaq, who has reportedly managed to evade them for almost four weeks.

I teamed up with @FTX_Official to help make crypto more accessible for everyone. We have a whole lot planned and let's start it off with a bonus. Use code SHAQ to earn $10 when you trade $100 on #FTX. Start the journey here: https://t.co/CFS9txvfzA https://t.co/K5ZDJjP9Pm

— SHAQ (@SHAQ) June 1, 2022

An email from Garrison’s lawyers stated:

The sole remaining Defendant to accept service of the complaint is Defendant Mr. Shaquille O’Neal, who we know has discussed the existence of this case, but is apparently still actively evading service, refusing to answer his home door when approached by our process servers.

Related Reading | Crypto-Friendly Bank Seized By Regulators Amid Financial Turmoil

Filed Under: News, World Tagged With: Alameda, Binance, Coinbase, ftx

Tether Takes On WSJ: Calling Out Misleading Reporting & Bias

March 11, 2023 by Ammar Raza

Tether, a leading stablecoin issuer, has slammed the Wall Street Journal (WSJ) for what it calls outdated, inaccurate, and misleading coverage and allegations against the company. 

In a recent blog post, Tether accused the WSJ of publishing 84 negative articles about or mentioning Tether from 2021 to 2022 while publishing almost all positive articles about or mentioning FTX in the same period.

It demonstrates that Tether has been the target of negative reporting by the WSJ and other legacy media, while positive coverage has been reserved for companies like FTX, despite high-profile failures. 

Tether claimed that the latest WSJ report insinuates that the company operates outside regulation, which is far from the truth. The company asserts that it operates under substantial financial regulations and cooperates on a daily basis with global law enforcement. 

The company adds that it has been a target of reporting from legacy media like the WSJ, but unlike other firms supported by the MSM, it “has continually met its commitment to increased transparency, cooperation with regulators, and adjusting its reserves.”

Tether’s Commitment to Transparency, Regulation, & Risk Prevention

Despite criticism from the WSJ and other quarters, Tether has taken direct action to dispel doubts about its operations. During the Terra Luna collapse, for instance, the company was able to redeem over 10% of USDT, equal to $7 billion, within two days.

Tether asserts that it is a committed partner of global law enforcement and has built and maintained world-class compliance programs. The company has strict KYC/AML standards, conducts enhanced due diligence on all customers, and conducts sanctions and blockchain screening to ensure its customers’ funds are not connected to high-risk wallets.

The company also partnered with IHOPE to combat child trafficking, a cause that the company is passionate about supporting. The firm’s efforts have resulted in freezing over ~$400 million as a result of various investigations.

The blog post asserts that despite biased coverage from traditional media such as the WSJ, Tether remains steadfast in its dedication to establishing a worldwide financial infrastructure that provides tangible advantages to individuals in developing economies. 

Additionally claims that the stablecoin developed by the company is currently being utilized by individuals and enterprises across the globe to satisfy their financial requirements.

Related Reading | Quant (QNT) Bucks Trend With 10% Gain & Amidst Crypto Market Bloodbath

Filed Under: News, Altcoin News Tagged With: ftx, Tether

FTX Founder’s Criminal Trial In Limbo As Lawyers Seek More Time 

March 9, 2023 by Mishal Ali

FTX founder, Sam Bankman-Fried, may face a delay in his criminal trial as his lawyers claim that they need more time to prepare his defense. 

In a letter to United States District Judge Lewis Kaplan, Bankman-Fried’s legal team noted that they are still awaiting a “substantial portion” of evidence and more charges have been laid against their client in late February. However, the lawyers clarified that they were not formally requesting a change in the date yet.

The letter, submitted on March 8th, included several issues that SBF’s lawyers would like to discuss at an upcoming conference scheduled for March 10th. The issues raised in the letter include SBF’s access to the FTX transactional database, bail conditions, motions schedule, and discovery status.

The lawyers requested that Cohen & Gresser’s ShareFile website be added to the list of approved websites that SBF may access. They also noted that he has been unable to begin reviewing the AWS Database. It is a crucial component of the discovery process, as his current bail conditions prohibit him from using a VPN. 

The defense has built a custom laptop with the security protocols required by the FTX Debtors and has been ready to send it to SBF for some time.

Under the current motions schedule, the defense’s pretrial motions are due April 3rd, the Government’s response is due April 24th, and the defense’s reply is due May 8th. 

FTX Founder With Further Criminal Charges

However, the Government updated the charges against FTX’s SBF, including fraud related to derivative trading, securities fraud, and involvement in unlicensed money transmission. 

The defense mentioned that they hadn’t received crucial discovery materials, such as search warrant returns from thirty Google accounts and data from four electronic devices.

Due to the superseding indictment and significant outstanding discovery, SBF’s lawyers have requested a delay in the motions schedule. The defense suggests that pretrial motions be due on May 1st, the Government’s response on May 22nd, and the defense’s reply on June 5th. 

Depending on the volume and timing of additional discovery, the defense may need to request an adjournment of the trial, scheduled for October 2nd, 2023.

However, SBF’s lawyers are currently awaiting a substantial portion of evidence and have requested more time to prepare his defense. They have raised several issues that they would like to discuss with the Court at an upcoming conference.

Related Reading | Polygon Teams Up With ZettaBlock & QuickNode For zkEVM Mainnet Beta Launch

Filed Under: News, World Tagged With: ftx

Crypto Takes the Stage: Senator Gillibrand Introduces New Bill Set For April Release

March 9, 2023 by Ammar Raza

In a Senate Agriculture Committee hearing on CFTC oversight, Senator Kirsten Gillibrand announced a new draft of her crypto bill. The committee discussed the CFTC’s limitations when it comes to crypto markets, with members expressing concerns over fraud and criminal use. Despite being a farm bill year, the committee acknowledged the importance of federal oversight in the crypto industry.

I'll be live-tweeting the Senate Agriculture Committee's hearing on CFTC oversight with Chair Rostin Behnam.

The committee has been quiet this year after introducing the Digital Commodities Consumer Protection Act in 2022, a favorite of SBF

— Leo Schwartz (@leomschwartz) March 8, 2023

Senators Express Concerns About Criminal Use Of Crypto

Leo Schwartz, a reporter for Fortune Magazine, live-tweeted the hearing, noting that the committee has been relatively quiet this year regarding crypto. However, the committee hosted an FTX-focused hearing in December, and Schwartz speculated on whether crypto and digital assets would be a focus of the hearing.

However, Senator Debbie Stabenow opened the hearing by warning of the volatility and fraud present in the industry, highlighting the need for federal oversight. Ranking member Boozman spoke about the CFTC’s role and expressed confidence in its ability to regulate the digital commodity spot market.

Chair Rostin Behnam reiterated the CFTC’s limitations when it comes to crypto markets, highlighting the need for legislation that could help prevent fraud before it happens.

Senator Roger Marshall expressed his concerns about the criminal use of digital currencies and questioned the activities of Binance. He cited Binance as having laundered billions of dollars. Senator Sherrod Brown also expressed concerns about crypto markets and their potential for fraud and manipulation.

Other senators, including Tuberville, Klobuchar, and Durbin, also shared their views on the crypto industry and its regulation. Behnam praised Gillibrand’s new crypto bill as being comprehensive, covering stablecoins, custody, cybersecurity risk, and other important issues.

The hearing highlighted the differing views of the CFTC and SEC regarding Ether, with Behnam insisting that it is a commodity, while the SEC has yet to make a definitive ruling. The issue of stablecoins was also discussed, with Behnam stating that they are going to be commodities in his view, potentially setting up another conflict with the SEC.

The committee discussed various crypto bills, with Senator Roger Marshall expressing concerns over criminal use and Binance’s alleged laundering of $2.35 billion. Behnam ranked his concern over digital assets markets at 7.5 out of 10, while Senator Sherrod Brown expressed a higher concern level.

The committee discussed the definition of commodities versus securities in relation to digital currencies. Behnam stated that Bitcoin, Ether, and Tether are commodities, while Gensler has said that every cryptocurrency is likely a commodity except for Bitcoin. 

Senator Amy Klobuchar asked Behnam about his current views on crypto markets, to which Behnam stated that he does not see the current bear market as a permanent change.

Towards the end of the hearing, Gillibrand announced a new draft of her bill with Senator Lummis, set to be released mid-April. Behnam praised the bill for being comprehensive and addressing stablecoins, custody, and cybersecurity risk. He also stated that stablecoins are commodities in his view, potentially setting up a conflict with the SEC.

However, the Senate Agriculture Committee’s hearing on CFTC oversight highlighted the importance of federal oversight in the digital assets industry, with members expressing concerns over fraud and criminal use. Additionally, announcing a new draft of Senator Gillibrand’s bill adds to the ongoing discussion surrounding federal regulation in the industry.

Related Reading | Binance Leads the Way with PoR Upgrade & Range-Bound Launch

Filed Under: News, World Tagged With: Binance, CFTC, Cryptocurrency, ftx, SEC

SHIB Founder Ryoshi’s True Identity Remains A Mystery, But Clues Emerge

March 8, 2023 by Ammar Raza

In recent eye-catching news, the identity of the elusive SHIB founder, Ryoshi, has been speculated upon by Conor, a director at Coinbase. Conor came across an OpenSea account that was linked to Kusama’s address and had the name “Alameda,” which he thinks might be connected to the SHIB founder. However, he kept Ryoshi’s true identity a secret.

A wallet directly connected to the founder of Shiba Inu (via exchange deposit) has an… interesting Opensea account name pic.twitter.com/pq6koANFMu

— Conor (@jconorgrogan) March 6, 2023

According to Conor’s tweet, the anonymous founder of the meme token, Ryoshi, deposited into a Bitkub deposit address on two occasions in 2020 and 2021. 

Conor linked this deposit to an Opensea account with the handle “ALAMEDA,” which is believed to belong to the founder. It is unclear why the SHIB founder would take Alameda’s Opensea handle in 2020, but Conor speculates it could be for “the memes.”

In a previous tweet thread from February 9th, Conor also highlighted that Alameda and SHIB have some history. On October 27th, 2021, the largest Shiba Inu farmer unstaked $107M of SHIB and sent it all to FTX, Huobi, Binance, and OKX. 

On October 27th, 2021, the largest Shiba Inu farmer unstaked $107M of SHIB and sent it all to FTX, Huobi, Binance, and OKX

This marked the absolute top; SHIB immediately began to plummet, never to recover.

Coincidently, one exchange had just expanded SHIB perps 🧐 pic.twitter.com/xxooDFqDcD

— Conor (@jconorgrogan) February 9, 2023

This marked the absolute top, and SHIB immediately began to plummet, never to recover. Coincidentally, one exchange had just expanded SHIB perps. Conor believes that some “savvy sleuths” might be able to guess who this exchange belongs to.

Conor concluded his thread by stating that understanding how to read the blockchain is easily the highest ROI for crypto traders. Anyone could have seen in real-time that the largest staker was depositing nine figures in various exchanges, and generally, that doesn’t mean they are about to buy more. 

SHIB Community Speculates

The mystery surrounding the true identity of Ryoshi, the founder of Shiba Inu, has left the crypto community in a state of curiosity and speculation. Recent discussions on social media platforms have sparked conversations about who the mastermind behind the beloved meme coin might be.

In response to Conor’s tweet, one user claimed, “Remember that guy who invested 8k in the token and made over 6 billion?” Others suggested that Ryoshi could be Sam Trabucco and that the meme token was an FTX covert operation. 

While some argued that they had spoken to the actual founder and that he was not Sam, others chimed in, stating that they believed it was common knowledge that Sam Bankman was the creator of the meme token.

The opinions on the matter are divided, with some arguing that the identity of Ryoshi should be kept a secret to maintain the mystique surrounding the coin, while others are eager to uncover the truth.

Related Reading |  Bitcoin’s 32% YTD Return Outshines Major Stock Indices & Gold

Filed Under: News, Altcoin News Tagged With: ftx, OpenSea, SHIB

$9B At Stake: FTX Debtors Sue Grayscale For Violating Trust Agreements

March 7, 2023 by Mishal Ali

FTX and its associated debtors have made an announcement regarding a lawsuit filed by one of their debtor affiliates, Alameda Research, against Grayscale. Additionally, the FTX debtors have raised claims against Grayscale’s CEO, Michael Sonnenshein, as well as its proprietors, Digital Currency Group and Barry Silbert.

The move has the potential to release over $9 billion in value for shareholders of Grayscale Bitcoin and Ethereum Trusts. The lawsuit claims that Grayscale has violated the Trust agreements by charging exorbitant management fees, preventing shareholders from redeeming their shares, and causing the Trusts’ shares to trade at a 50% discount to Net Asset Value.

FTX Debtors Seek Recovery, Potential For 90% Increase In Value

The FTX Debtors are pursuing an injunction to recover assets worth over $250 million for their clients and debtors. If Grayscale lowers its fees and ceases to impede redemptions, the value of FTX Debtors’ shares could increase by around 90% to at least $550 million.

John J. Ray III, the CEO of FTX Debtors, affirmed that they would utilize all available resources to optimize recoveries for both FTX customers and creditors. He further stated that their objective is to unlock the potential value that they believe is being suppressed by Grayscale’s self-serving actions and unjust redemption prohibition. 

Through their efforts, not only will FTX customers and creditors benefit from increased recoveries, but other investors in Grayscale Trust who are being negatively impacted by Grayscale’s actions will also benefit.

The lawsuit filed against Grayscale comes as no surprise to many who have been following the ongoing saga between the two companies. 

Grayscale has been the subject of criticism from some investors who claim that the company’s management fees are too high and that it has prevented shareholders from redeeming their shares. Grayscale has argued that it has taken steps to address these concerns and that it has acted in the best interests of its shareholders.

The outcome of the lawsuit filed by the FTX Debtors remains uncertain, but it could have significant implications for both companies and their shareholders. If the FTX Debtors are successful in unlocking $9 billion in value, it could provide a significant boost to their customers and creditors.

Grayscale, on the other hand, could face further legal challenges and may be forced to make changes to its management fees and redemption policies. 

The lawsuit highlights the ongoing debate over the role of fees and transparency in the cryptocurrency industry and underscores the importance of companies acting in the best interests of their shareholders.

Related Reading | Polygon ID Releases Four Tools To Foster Trust & Privacy In The Digital World

Filed Under: News, World Tagged With: alameda Research, Bitcoin (BTC), Ethereum (ETH), ftx, Grayscale

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