SEC

Grayscale Is Suing The SEC For Denying Its Spot Bitcoin ETF

30/06/2022 by Idelto Editor

Grayscale Investments announced it will sue the U.S. SEC for denying its application to convert its fund into a spot bitcoin ETF.

Grayscale Investments is suing the SEC for denying its application to convert GBTC into an ETF.
The filing was submitted yesterday evening by the former top legal mind that served in the Obama administration as U.S. solicitor general.
Over 11,000 comment submissions were sent to the SEC by investors, 99% of which were positive towards the transition of GBTC into an ETF.

Grayscale Investments, one of the world’s largest digital asset managers, is suing the U.S. Securities and Exchange Commission (SEC) after the regulator denied its application to convert its flagship bitcoin fund, GBTC, into an exchange-traded fund (ETF), per a press release

“As Grayscale and the team at Davis Polk & Wardwell have outlined, the SEC is failing to apply consistent treatment to similar investment vehicles, and is therefore acting arbitrarily and capriciously in violation of the Administrative Procedure Act and Securities Exchange Act of 1934,” said Donald B. Verrilli Jr., Grayscale’s senior legal strategist and former U.S. solicitor general.

Verrilli was announced as a new member of Greyscale’s legal team on June 7, as the company had been preparing for a worst-case scenario. Grayscale also began a letter campaign with investors where over 11,400 total submissions were sent to the SEC, 99% of which were in favor of the fund’s transition to an ETF.

“Through the ETF application review process, we believe American investors overwhelmingly voiced a desire to see GBTC convert to a spot Bitcoin ETF, which would unlock billions of dollars of investor capital while bringing the world’s largest Bitcoin fund further into the U.S. regulatory perimeter,” said Michael Sonnenshein, Grayscale’s CEO.

Grayscale announced its intentions to transition the fund into an ETF in April 2021. A formal request to do so was then submitted later that year, in October. Since then, Grayscale has mounted many efforts to properly inform the public of its intentions and to meet all regulatory requirements.

While the SEC has a 240-day deadline to make decisions on these matters, which would have ended July 6, it can issue decisions early. Even though some may hear this news as disheartening, the forced litigation of the matter could create a standing precedent for the ecosystem that might be beneficial in the long-term.

SEC Chair Gensler Proposes ‘One Rule Book’ Crypto Regulation

27/06/2022 by Idelto Editor

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has reportedly proposed “one rule book” for the regulation of crypto assets. “If this industry is going to take any path forward, it will build some better trust in these markets,” said Gensler.

SEC Chairman Calls for One Rule Book for Crypto

SEC Chairman Gary Gensler has proposed “one rule book” for the regulation of crypto, the Financial Times reported Friday. He is looking to strike agreements with other financial regulators, including the Commodity Futures Trading Commission (CFTC), to avoid gaps in the oversight of the crypto sector. He told the publication:

I’m talking about one rule book on the exchange.

The SEC chief elaborated that the rule should protect investors against fraud, front-running, and manipulation, in addition to providing transparency over order books.

The rule book will apply to “all trading regardless of the pair — [be it] a security token versus security token, security token versus commodity token, commodity token versus commodity token,” Gensler described.

The SEC boss revealed that he is working on a “memorandum of understanding” with his counterparts at the CFTC, which would be a formal deal to ensure that trading in digital assets has adequate safeguards and transparency. He explained that if a commodity token is listed on a platform overseen by the securities regulator, the SEC would “send that information over to the CFTC.”

Gensler opined:

By getting that market integrity envelope, one rule book on an exchange will really help the public. If this industry is going to take any path forward, it will build some better trust in these markets.

U.S. Senators Kirsten Gillibrand and Cynthia Lummis recently proposed a framework that would extend the CFTC’s oversight of the crypto sector.

Last week, Gensler warned of “too good to be true” crypto products. He also recently warned that crypto exchanges often trade against their customers. Following the collapse of cryptocurrency terra (LUNA) and stablecoin terrausd (UST), the SEC chairman cautioned investors that a lot of tokens will fail.

Gensler has been criticized for taking an enforcement-centric approach to regulating crypto assets. SEC Commissioner Hester Peirce said in May that the securities watchdog has dropped the ball on crypto regulation and there are long-term consequences.

What do you think about the comments by SEC Chairman Gary Gensler? Let us know in the comments section below.

Do Kwon Interview Explains He’s ‘Devastated’ by LUNA Collapse, Says ‘There’s a Difference Between Failing and Fraud’

23/06/2022 by Idelto Editor

During a recent interview with the Wall Street Journal (WSJ), Terraform Labs (TFL) founder Do Kwon said he was “devastated” by the LUNA and UST implosion that took place in mid-May. He told the WSJ that he was probably a billionaire when LUNA tapped an all-time high before the collapse, but lost a great portion of his net worth following the aftermath.

Do Kwon Speaks About the Terra LUNA Collapse

Do Kwon has recently discussed the LUNA and UST fallout during an interview with the WSJ contributors Alexander Osipovich and Jiyoung Sohn. The interview was published on June 22, and its the first interview Kwon has done since the Terra collapse. Kwon told the reporters that he lost most of his wealth after the crash but that doesn’t bother him that much. “This doesn’t bother me,” Kwon told the reporters. “I live a fairly frugal life,” the Terra co-founder said.

Kwon, however, said he was sorry about the losses investors took from the fallout. “I’ve been devastated by recent events and hope that all the families who’ve been impacted are taking care of themselves and those that they love,” Kwon stated in the interview. He also discussed his confidence that many called cocky, and noted that it was because he was a big believer in the Terra ecosystem. Kwon said:

I made confident bets and made confident statements on behalf of UST because I believed in its resilience and its value proposition.” Adding he said, “I’ve since lost these bets, but my actions 100% match my words. There is a difference between failing and running a fraud.

Kwon Has ‘Great Confidence’ in the Terra’s ‘Ability to Build Back Even Stronger’

Furthermore, Kwon discussed the new Terra blockchain and LUNA 2.0 which is down 90% from the $18.87 per unit all-time high and now trades for $1.88. LUNA 2.0 has a market capitalization of around $238 million on June 23 and the token has lost 2.6% during the past 24 hours. Kwon believes the revival will be strong and thinks that LUNA 2.0 could someday surpass the LUNA classic (LUNC) chain.

“I have great confidence in our ability to build back even stronger than we once were,” Kwon told The WSJ reporters. Kwon’s WSJ interview follows the reports that said the U.S. Securities and Exchange Commission (SEC) was investigating Terraform Labs and the UST collapse. Moreover, a whistleblower called Fatman has accused Kwon of having massive amounts of LUNA in personal wallets.

Fatman has also accused Kwon of cashing out $2.7 billion in funds before the project collapsed but the Terra co-founder denies that he cashed out and he said the allegations were false. Kwon and Terraform Labs are also being sued in a class-action lawsuit that claims the co-founder and company misled investors. Additionally, official records indicate that Do Kwon dissolved Terraform Labs Korea before the LUNA and UST collapse. Three members of Terraform Labs’ in-house legal team left the company amid the controversy as well.

What do you think about Do Kwon’s interview with the WSJ? Let us know what you think about this subject in the comments section below.

Crypto Lender Blockfi Secures $250 Million Line of Credit From FTX, CEO Says Capital Will Bolster Its Balance Sheet

21/06/2022 by Idelto Editor

The crypto lender Blockfi detailed on Tuesday that the company secured a $250 million line of credit from FTX. Blockfi’s CEO Zac Prince announced on Twitter that the company will use the capital to bolster Blockfi’s “balance sheet and platform strength.”

Blockfi Obtains $250 Million Revolving Credit Line From FTX After Crypto Lending Firms Struggle With 2022’s Market Volatility

It’s been a rough year for crypto lenders due to digital assets losing significant value over the last few months. One lender, Celsius, has been accused of being insolvent and last week it paused withdrawals.
In 2021, U.S. securities regulators from various states sent cease and desist orders to Celsius and the crypto lender Blockfi. In February 2022, the U.S. Securities and Exchange Commission (SEC) charged Blockfi for failing to register its retail crypto lending products.
During the second week of June, Blockfi co-founders Zac Prince and Flori Marquez announced the company would lay off “roughly 20%” of its staff due to “market conditions” that had a “negative impact” on the company.
On June 16, Prince discussed “speculation about BlockFi’s risk management practices,” and the Blockfi CEO stressed that the company always enforces “prudent and proactive risk management.”
Prince revealed on Tuesday that Blockfi has secured a $250 million line of credit from FTX. “Today Blockfi signed a term sheet with FTX to secure a $250M revolving credit facility providing us with access to capital that further bolsters our balance sheet and platform strength,” the Blockfi CEO said.
“The proceeds of the credit facility are intended to be contractually subordinate to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed,” Prince continued in his Twitter thread.

The Blockfi CEO added that during the crypto market volatility, he was proud of the company’s risk management protocols and he further said that the agreement with FTX “unlocks future [collaborations]” with the crypto company.
Meanwhile, since Celsius paused withdrawals, the crypto lending company updated the community in a newly published blog post. “We want our community to know that our objective continues to be stabilizing our liquidity and operations. This process will take time,” the Celsius blog post details.

What do you think about the current state of crypto lending firms? What do you think about Blockfi securing $250 million from FTX? Let us know what you think about this subject in the comments section below.

SEC Chair Warns of ‘Too Good to Be True’ Crypto Products — US Treasury Calls for Urgent Regulation

20/06/2022 by Idelto Editor

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has warned the public about crypto investments that seem “too good to be true.” Meanwhile, the U.S. Treasury Department says that the recent crypto market turmoil underscores the urgent need for regulatory frameworks that mitigate the risks posed by digital assets.

SEC Chair Gensler’s Crypto Warning

SEC Chairman Gary Gensler cautioned investors last week about crypto lending platforms offering products that seem too good to be true, Reuters reported.

The securities regulator’s warning followed crypto lender Celsius Network’s withdrawal freeze early last week.

“We’ve seen again that lending platforms are operating a little like banks. They’re saying to investors ‘Give us your crypto. We’ll give you a big return 7% or 4.5% return,’” Gensler was quoted as saying. “How does somebody offer (such large percentage of returns) in the market today and not give a lot of disclosure?”

The SEC chair stressed:

I caution the public. If it seems too good to be true, it just may well be too good to be true.

The SEC and several state securities regulators are currently investigating Celsius Network’s decision to freeze withdrawals. According to reports, the company subsequently hired Citigroup as an advisor and sought help from Akin Gump Strauss Hauer & Feld, a law firm that specializes in financial restructuring.

Following Celsius, Hong Kong-based Babel Finance temporarily suspended withdrawals and redemptions of its crypto products.

Treasury Official Stresses Urgent Need for Crypto Regulatory Frameworks

The collapse of cryptocurrency terra (LUNA) and stablecoin terrausd (UST) in early May and troubles at crypto lending platforms have shaken the crypto market.

Bitcoin fell below $20K for the first time since 2020 this weekend as the overall crypto market shed over a trillion dollars in market capitalization since mid-April.

Following the crypto market sell-off, an official with the U.S. Treasury Department highlighted the urgent need for cryptocurrency regulation last week. Nothing that the Treasury Department is “monitoring activity in the crypto market,” the official told Reuters:

We believe the recent turmoil only underscores the urgent need for regulatory frameworks that mitigate the risks that digital assets pose.

“We continue to work closely with our regulatory partners, as they take action under their existing authorities, and offer guidance and expertise as Congress considers legislation to further address these risks,” the official detailed.

What do you think about SEC Chair Gensler’s warning? Let us know in the comments section below.