Keeping up with cryptos? Check out the latest crypto news very week on the Punt Casino blog.
Crypto Espresso: Your Weekly Crypto News Update
June 26, 2023
Crypto Espresso: Your Weekly Crypto News Update
June 26, 2023
Biggest Crypto News Stories Last Week:
Last week in the crypto world we saw Bitcoin’s price boosted by multiple Bitcoin ETF applications, Do Kwon sentenced to four months in a Montenegran prison, and the mismanagement of Bitcoin custodian Prime Trust laid bare.
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Bitcoin Price Boosted by Bitcoin ETF Scramble
Bitcoin enjoyed a $5,000 price jump last week following an unpredicted Bitcoin ETF scramble following BlackRock’s recent application. Bitcoin had been steadily trending downwards in price since hitting $31,000 in April, and with bad news followed by more bad news, it seemed that this pattern was destined to continue.
However, a sudden swathe of good news on the institutional front has galvanized the cryptocurrency, lifting not just the price but the mood around the asset in general.
BlackRock’s Bitcoin ETF application came out of the blue and showed a level of interest in Bitcoin that many had thought had dried up. This was followed on Monday by suggestions that another asset giant with its toes already in the crypto pool, Fidelity, might be about to follow suit, possibly by buying out the Grayscale Bitcoin Trust, which has set its sights on Bitcoin ETF conversion.
This proved to be just the start of the ETF mania, however, as four more firms filed Bitcoin ETF applications last week, all of which have already seen prior applications rejected or pulled in the past: Valkyrie, whose prior Bitcoin ETF was rejected in December 2021; WisdomTree, which saw its application rejected in October 2022; BitWise, which had its application rejected in June 2022; and Invesco, which pulled its application in November 2021, claiming that it would have been too costly for investors.
Now, however, there seems to be a suggestion that BlackRock has somehow found the key to unlock the SEC’s cold heart when it comes to Bitcoin ETFs, prompting this glut of reapplications.
The positive sentiment around Bitcoin was augmented by comments from Federal Reserve chair Jerome Powell who admitted that crypto appears to have “staying power” as an asset class, all of which helped Bitcoin reverse more than two weeks of downtrend and hit $30,500.
Do Kwon Sentenced for Fake Passport
The co-founder and CEO of Terraform Labs, Do Kwon, has been sentenced to four months in prison in Montenegro for using fake documentation. Kwon, whose reckless operation of the Terra/LUNA ecosystem in 2022 caused the collapse of the $40 billion empire, had claimed that he didn’t realise his passport was fake but the judge wasn’t buying it, sentencing both Kwon and his traveling companion, Han Chang-Joon, to prison time minus time already served.
Kwon and Han were arrested in March while trying to fly from Montenegro’s Podgorica airport to Dubai on fake Costa Rican passports, with officials also finding similarly fake Belgian passports on their persons. The pair were arrested, whereupon US and South Korean authorities immediately began extradition proceedings; Kwon is wanted for violation of financial crimes in South Korea, while the SEC has filed fraud charges against him over the running of Terraform Labs.
Given the time Kwon has already served in detention, he will likely face just weeks in prison before being released, although he may well spend time in “extradition custody” while the Montenegran courts decide where he should go next.
Kwon had tried to claim that he didn’t know his passports were fake and that he couldn’t have used them to travel the world if they were. This suggests that either multiple countries in the world weren’t able to detect the fakes or the fakes included backdated visas for authenticity purposes, which is much more likely.
BitGo Cancels Prime Trust Acquisition
Crypto custodian BitGo last week pulled out of a deal to buy competitor Prime Trust after the latter was issued with a cease-and-desist order by the Nevada Department of Business and Industry.
The authority raised the alarm after identifying a “shortfall in customer funds” that led to Prime Trust being unable to fulfil all withdrawal requests in recent months, validating concerns held by many about Prime Trust’s financial position. The order has raised questions regarding how the financial activities of a Bitcoin custodian could have reached such a “critically deficient state”.
BitGo made a public announcement regarding its intention to acquire Prime Trust at the start of the month, following speculation that Prime Trust required $25 million to address unspecified financial challenges. The deal was seen as a potential solution to these concerns and so the matter was considered over, but the cease-and-desist order issued by the Financial Institutions Division of the Nevada Department of Business and Industry has shed light on the situation and emphasized the gravity of the matter:
“On or about June 21, 2023, Respondent [Prime Trust] was unable to honor customer withdrawals due to a shortfall of customer funds caused by a significant liability on the Respondent’s balance sheet owed to customers. Respondent has materially and willfully breached its fiduciary duties to its customers by failing to safeguard assets under its custody and is unable to meet all customer disbursement requests.”
It’s not yet clear exactly how a company whose sole job is to hold bitcoin has managed to get things so badly wrong, but there was almost certainly some kind of mismanagement, criminal or otherwise. Naturally, BitGo pulled the plug on the deal, which is somewhat ironic given that it was almost two years ago this week that Galaxy Digital pulled out of a deal to buy BitGo itself.
Trending stories:
- Crypto firm Ripple has been awarded a provisional license to operate its services in Singapore, marking a new direction for the company.
- Deutsche Bank last week applied for a digital asset custody license as part of its attempts to branch out into new sectors.
- Binance has confirmed it is adding Lightning Network capabilities to its Bitcoin deposit and withdrawal mechanisms.
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