The Crypto Currier 9th April

Grayscale's ETF is heamorrhaging cash, Do Kwon and Terraform Labs are found liable on civil fraud charges, BitMEX's price manipulation charges, and secondary transactions are not securities

Grayscale’s Bitcoin spot ETF fund is hemorrhaging cash, its investors are redeeming their funds. To date,?GBTC?has seen outflows of over $15 billion, the largest outflows of any ETF since March 2009. If the bleeding continues at this pace, it will run out of Bitcoin by July 8th, although that’s unlikely, outflows have reduced drastically. In an attempt to keep afloat, Grayscale has filed for a mini Bitcoin ETF with lower fees in a bid to compete, but waiting for regulatory approval will be a slow burn. Investors wanting lower fees will be part of the outflow, a need to access funds after various crypto collapses will also be part, and Grayscale’s association with parent company DCG likely won’t be helping. Still, Grayscale has told Decrypt that there’s nothing to worry about.

A US federal judge has determined that one of the co-founders of crypto exchange BitMEX was key to an alleged price manipulation plot. According to the ruling, Ben Delo "was central" to the purported manipulation activities, having "conceived of and designed" a liquidation mechanism that enabled BitMEX “to profit from the manipulation.” Delo now faces a class-action lawsuit from exchange users, who in 2020 filed a lawsuit against the exchange and co-founders Delo,?Arthur Hayes?and Samuel Reed, claiming they had a trading desk with “God Access” to BitMEX customer accounts. The lawsuit alleges the three co-founders exploited customer information to determine which market moves would liquidate the most users to profit the exchange, and then executed trades to ensure this outcome.

A Manhattan jury has found Terraform Labs and it’s co-founder Do Kwon liable on civil fraud charges, agreeing with the US SEC’s allegations that the platform misled investors about the stability of its algorithmic stablecoin TerraUSD. Terraform Labs is also accused of falsely claiming that its blockchain was integrated with a popular Korean mobile payment app. The collapse of the platform and its two digital currencies led to investor losses estimated at over $40 billion.

FTX founder SBF has done further damage to the effective altruism movement. The UK-based effective altruism charity SBF bankrolled is set to wind down. The charity Effective Ventures was hit by FTX’s bankruptcy. Together with its US arm, it has to to repay the FTX bankruptcy estate nearly $27 million that it received from FTX in 2022.

The US Court of Appeals has ruled in favour of Coinbase in its ongoing case which had seen the exchange accused of offering and selling unregistered securities. This victory confirms that secondary sales of cryptocurrencies on the exchange do not violate the Securities Exchange Act. This is good news for the crypto industry, which has long argued that secondary sales do not constitute securities transactions.

The Binance executive detained in Nigeria in February has been remanded and sent to Kuje Correctional Center after his not guilty plea and pending the outcome of his bail application. Tigran Gambaryan, fellow Binance executive Nadeem Anjarwalla who escaped his detention in Nigeria, and Binance face five counts of money laundering and tax evasion charges. They are accused of concealing the source of the $35.4 million the exchange generated from the country, of helping to process billions in illegal funds and manipulating the exchange rate of the Nigerian naira. Binance claims Gambaryan has no decision making authority. It’s as if he’s being held as a negotiation tool….

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