Welcome to the CoinSmart crypto recap. Let’s look at the hottest stories that came up this past week. Here is an overview:
- BlockFi CEO accused of fraud and extortion
- Fidelity on the verge of filing spot ETF
- Nevada cracks down on Prime Trust
- FTX recovers $7b in liquid assets
BlockFi CEO accused of fraud and extortion
Creditors have filed to liquidate BlockFi, accusing its CEO, Zac Prince, of intentionally delaying the bankruptcy process to negotiate legal protections for senior management. They claim BlockFi is spending $16 million monthly on unnecessary costs. Meanwhile, BlockFi updated its bankruptcy plan, suggesting that account holders owed $1 billion could recover 39%-100% of their assets, as opposed to the 36%-60% expected through liquidation.
Fidelity on the verge of filing spot ETF
Investment company Fidelity is preparing to file a Bitcoin exchange-traded fund (ETF) with the US Securities and Exchange Commission (SEC), the second attempt after the first one was rejected two years ago. Other firms like BlackRock, Bitwise, Invesco, and WisdomTree have also filed Bitcoin ETFs with the SEC. Fidelity already has a functioning Bitcoin ETF in Toronto, Canada, called Fidelity Advantage Bitcoin ETF, symbol FBTC. The firm’s move comes as the crypto market shows signs of going mainstream, with studies showing at least 420 million global crypto asset holders. This move aligns with the trend of asset managers seeking alternative investments due to the slow growth of traditional markets and rising inflation.
Nevada cracks down on Prime Trust
Nevada’s Financial Institutions Division has filed to assume control of crypto custodian Prime Trust and halt its operations, alleging that the firm is near insolvency. The firm reportedly owes over $85 million in fiat and about $69.5 million in crypto to its clients, while only having approximately $3 million in fiat and $68.6 million in crypto available. The filing also revealed Prime Trust is operating with a $12 million equity deficit, partly due to its inability to access “legacy wallets.” Although efforts have been made to regain access, they have so far been unsuccessful. In the interim, the state filing requests that Prime Trust’s operations be suspended and all its assets frozen. Both Prime Trust and the Financial Institutions Division have requested the appointment of a receiver to decide the best course of action for the firm’s clients.
FTX recovers $7b in liquid assets
As per a report from the FTX bankruptcy team, the exchange reportedly owes $8.7 billion to its customers, with $6.4 billion of that being misappropriated fiat currency and stablecoins. Fortunately, it looks like $7 billion in liquid assets seems to have been recovered so far. The investigation is ongoing, and efforts continue to identify additional recoveries and restitution for creditors. The report also, unfortunately, confirms that the exchange’s management knowingly mishandled customer funds and engaged in deceptive practices, including falsifying documents.
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