The United States Department of Justice (DOJ) has reportedly conducted a series of transactions involving a cryptocurrency wallet associated with them, moving approximately 9,825.25 Bitcoin worth around $299 million on July 12.
The purpose of these transactions and the current whereabouts of the Bitcoin remain unclear.
Initially, around 9,825 Bitcoin associated with the Silk Road seizure were sent in two transactions to three addresses at approximately 1:00 pm UTC.
The majority of these coins, equivalent to 8,200 BTC worth nearly $250 million, were transferred to a single address.
Subsequently, this address split the total amount across 101 separate addresses a little over an hour later.
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The U.S. government had previously announced its plans to sell the remaining Bitcoin from the Silk Road seizure in four batches throughout the year.
It is speculated that the recent transactions may be part of the government’s liquidity testing strategies. On March 7, 2023, one account involved in the batch transactions reportedly made a profit of $237,934,919 from BTC holdings not associated with the July 12 transactions.
However, another account that received 9,825.6 BTC from the DOJ during the March 7 batch distributed the coins among 101 accounts.
Subsequently, this account, along with 599 others, sent approximately 0.1 BTC (about $3,032) to yet another account, which then divided its holdings of approximately 51 BTC across 37 addresses.
The exact nature and purpose of these transactions have sparked speculation within the crypto community.
With over 800 wallet addresses involved, it has become increasingly challenging to track the U.S. government’s intentions with each coin.
This uncertainty has led some to fear that the Bitcoin market may be negatively impacted or that it could disrupt the ongoing bull run in the cryptocurrency economy, prompting investors to abandon their positions.
However, others dismiss these concerns as unnecessary fear, uncertainty, and doubt.
Despite the significant number of transactions, the market movement of BTC remained relatively stable, with less than 1% change in value over six hours after the transactions were conducted.
As the situation continues to unfold, the crypto community awaits further information regarding the DOJ’s actions and their potential impact on the cryptocurrency market.
Mike Novogratz, founder of Galaxy Digital, believes the United States government and the U.S. Securities and Exchange Commission (SEC) granting approval for a Bitcoin exchange-traded fund (ETF) would serve as a significant endorsement for the cryptocurrency.
Speaking in a recent Bloomberg TV interview, he noted that such approval could catalyze wider adoption as it would offer an easy entry point for many who are still hesitant to invest in cryptocurrencies.
Novogratz highlighted the influx of spot Bitcoin ETF applications before the SEC, including one from the $10 trillion asset manager, BlackRock. “BlackRock, Invesco, and other ETF providers signify a real indicator that adoption is forthcoming,” Novogratz stated.
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There’s a substantial infrastructure in place for these ETFs.
Proposals from BlackRock, Valkyrie, Invesco, VanEck, WisdomTree, Fidelity, and a joint fund by ARK Invest and 21Shares are awaiting approval. Novogratz anticipates that several, if not all, of these ETFs will likely receive the green light from the SEC.
He stated, “The SEC won’t just approve one; this will lead to these huge sales teams enabling access for people previously without.”
SEC Chair Gary Gensler has asserted that except for Bitcoin, other crypto assets fall under his agency’s jurisdiction, as they typically involve known developers and anticipated profits.
Regarding the likelihood of Galaxy and Invesco’s spot Bitcoin ETF obtaining a listing before the end of the year, Novogratz remained noncommittal.
“The SEC has been notably tough and unyielding on crypto. No significant player has yet made it through the listing process.
We’re engaged in that process, but it’s been lengthy and challenging,” he commented.
Novogratz is also optimistic about Bitcoin’s price trajectory. He predicted a year-end high for Bitcoin, stating that if the peak is breached, the cryptocurrency will enjoy a substantial uptrend.
He concluded, “A shift in the SEC’s stance or an administrative change would probably be needed for meaningful progress in U.S. crypto regulation.”
The recent surge in filings for spot Bitcoin exchange-traded funds (ETFs) signifies a significant validation for Bitcoin, according to Michael Sonnenshein, the CEO of Grayscale Investments.
Sonnenshein, in an interview on CNBC’s Last Call, dismissed the idea that BlackRock’s entry into the Bitcoin ETF race diminished its appeal.
He emphasized that BlackRock’s involvement adds credibility to the asset class and demonstrates its longevity.
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Over the past month alone, seven prominent institutional firms, including BlackRock, have submitted applications for spot Bitcoin ETFs in the United States.
If approved, these ETFs would offer both institutional and retail investors in the U.S. a straightforward and compliant avenue to gain exposure to Bitcoin’s price without actually owning the digital currency.
Sonnenshein highlighted the tried and tested nature of the ETF structure, which has facilitated access to various assets like commodities and stocks.
He emphasized that Bitcoin is an enduring asset that investors desire and deserve access to.
Previously, Grayscale provided U.S. investors with an indirect method of gaining exposure to Bitcoin through the Grayscale Bitcoin Trust (GBTC), which allowed trading of shares tied to large Bitcoin holdings.
However, the company intends to convert the GBTC into a spot Bitcoin ETF.
This transition would offer investors a more streamlined way to trade Bitcoin’s price, eliminating the discount to net asset value associated with GBTC.
Sonnenshein described the move to an ETF structure as a crucial development, providing investors with the additional safeguards they seek.
In June 2022, Grayscale filed a lawsuit against the United States Securities and Exchange Commission (SEC) after the rejection of its 2021 application to convert GBTC into an ETF.
Sonnenshein stated that a successful outcome in this legal challenge would unlock billions of dollars in investor capital.
Following BlackRock’s filing for a spot Bitcoin ETF on June 15, the price of Bitcoin surged by over 20%, reaching a year-high of $31,460 on July 6. As of now, it is trading at $30,633.
These developments indicate a growing interest in Bitcoin from institutional players and the potential for increased mainstream adoption through the introduction of regulated ETFs.
Overall, the flood of spot Bitcoin ETF filings represents a moment of validation for Bitcoin as a legitimate asset class, with the potential to broaden its accessibility to investors while providing additional protection and market opportunities.
On July 11, the United States Senate Financial Services Committee Chair Ron Wyden and ranking member Mike Crapo reached out to the digital asset community through an open letter, seeking input on the taxation of digital assets.
Recognizing the highly complex nature of this issue, the senators provided background reading from the Joint Committee on Taxation to assist respondents in formulating their answers.
The senators acknowledged that the Internal Revenue Code of 1986 does not offer a straightforward classification for digital assets.
As a result, they posed a series of questions covering nine subject areas to gain a deeper understanding of the challenges surrounding the taxation of digital assets.
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They explained that the Committee on Finance had initiated a bipartisan effort to identify key questions at the intersection of digital assets and tax law.
The letter explored various topics, including fair value (mark-to-market) accounting, the trading safe harbor to encourage foreign investment, digital asset loans, wash sales, constructive sales (related to short-selling), income from staking and mining, “nonfunctional currency,” reporting by foreign firms, and valuation and substantiation on an exchange.
Throughout the letter, specific sections of the tax code were referenced to provide context for the questions.
While the Internal Revenue Service (IRS) has primarily focused on combating criminal activities related to cryptocurrencies, it has also begun taking a more proactive approach to income taxation.
Earlier this year, the IRS proudly announced that it had seized a total of $10 billion in crypto as part of its law enforcement efforts.
In a recent case, the IRS demonstrated its increased emphasis on income taxation by issuing a summons to the crypto exchange Kraken in 2021.
The summons demanded user information on all transactions exceeding $20,000. On June 30, the District Court for the Northern District of California ordered Kraken to comply with the IRS’s request.
Interested parties have until September 8 to respond to the Senate committee’s letter, providing their insights and perspectives on the taxation of digital assets.
This outreach demonstrates the senators’ commitment to understanding the complexities involved and seeking input from the digital asset community to shape future tax policies.
Tortola, British Virgin Islands, July 12th, 2023, Chainwire
In its ongoing journey to reshape the crypto investing landscape, Struct Finance, a DeFi platform that enables investors to engage with tailored interest rate products linked to digital assets, is thrilled to announce the launch of the BTC.B-USDC Vaults.
The tranche-based BTC.B-USDC Interest Rate Product was made possible by effectively leveraging Avalanche’s BTC.B (Bridged Bitcoin) for DeFi applications. The new vault beautifully complements Struct Finance’s Genesis USDC Vaults, heralding an exciting era in DeFi yield opportunities. Struct Finance built the new vault on top of GMX’s Liquidity Provider Token (GLP) to generate predictable yields for BTC in the form of fixed returns, and USDC in the form of variable returns, while still leveraging a secure asset and minimizing volatility and exposure to other risks.
“Our BTC.B-USDC Vaults represent an innovative application of Bitcoin in DeFi. We’re taking full advantage of Avalanche’s Bridged Bitcoin (BTC.B) to bring about a fresh wave of opportunities in the digital asset space,” said Ersin Dalkali, the Co-founder of Struct Finance.
While Bitcoin continues to dominate the market, its inherent lack of a DeFi layer has traditionally made native yield generation quite challenging. Avalanche has unlocked new possibilities for Bitcoin in DeFi with BTC.B (Bridged Bitcoin). Unlike WBTC that relied on centralized bridges, BTC.B is minted via Avalanche Core — a decentralized bridge — and can be trustlessly bridged across networks using the Layer Zero bridge.
At present, Bitcoin investments in prominent lending pools yield between 0.2–0.5%. Even the stable swap pools offering wBTC-BTC.B products only manage to deliver returns of about 2%. Struct’s BTC.B-USDC product shatters these limitations, offering significantly higher yields.
The purpose of BTC.B is to empower BTC holders to explore DeFi opportunities on the Avalanche blockchain, without the need to acquire secondary tokens or rely on centralized bridges. BTC.B represents BTC coins transferred to the Avalanche blockchain in the form of ERC-20 tokens. With over 6000 BTC bridged and a fully diluted value of $180 million, BTC.B is carving a niche for itself in the crypto arena.
The Bitcoin ETF applications by BlackRock, WisdomTree, and Invesco – three of the world’s leading asset managers – are not just a mere submission. It is a signal that the traditional financial realm is ready to embrace Bitcoin on a new level. Recently, the US Securities and Exchange Commission (SEC) gave the green light to a 2X leveraged Bitcoin ETF, sparking an enthusiastic wave of speculation and anticipation for approval of a spot Bitcoin ETF.
Delta hedging
Amid the highly volatile crypto industry, Struct Finance’s Interest Rate Products allow anyone to split and repackage the risk of any yield-bearing DeFi assets in different parts to fit their risk profile through an innovative process called “tranching.” Every Interest Rate Product is a single vault split into two portions, or tranches that have different return configurations:
- A Fixed-return Tranche for conservative investors looking for consistent returns
- A Variable-return Tranche for investors with a higher risk appetite seeking superior returns
The yield from the underlying asset flows into the fixed tranche first to ensure predictable returns. The remainder is then allocated to the variable tranche, which gets enhanced exposure to the underlying yield-bearing asset. Compared to the fixed tranche, the variable tranche might accrue more yield, less yield, or no yield.
As part of its BTC.B-USDC Vaults, Struct Finance has implemented a unique approach to managing investment risk: delta hedging. While the fixed tranche takes center stage with its high yield, the variable side of the product offers an additional layer of intriguing complexity and potential.
Upon deployment of funds into the vault, the BTC.B in the fixed tranche gets converted into GMX’s GLP token, setting up a position that’s short Bitcoin against GLP and contributing a negative delta. In contrast, the USDC on the variable side is converted into GLP, which inherently carries a positive delta.
This innovative delta-hedged product design achieves a fine balance between the positive and negative delta forces. It results in a robust strategy that allows investors to confidently navigate the crypto market’s inherent volatility.
This artful interplay of the fixed and variable sides within the vaults opens the doors for investors to tap into the potential of Bitcoin investments like never before. By catering to a diverse range of risk appetites, Struct Finance ensures that both retail and institutional investors can tailor their strategies to maximize their returns, regardless of market conditions.
About Struct Finance
Struct Finance is at the forefront of the DeFi revolution, with a vision to transform the design and utility of financial products. It empowers users to design their own financial instruments, harnessing the power of tokenized, yield-bearing positions to unlock a world of diverse investment opportunities. Moreover, its cutting-edge financial products adopt a tranche-based system, smartly distributing yield between different investor classes. This balanced approach guarantees a steady yield for risk-averse investors while also offering the prospect of heightened returns to the more adventurous. Initially available on Avalanche, Struct Finance plans to go multichain in the near future.
For more information, visit: Website | Twitter | Discord | Telegram
Disclaimer: This release is for informational purposes only and should not be construed as financial promotion.
Contact
Miguel Depaz
media@struct.fi
The cryptocurrency community is abuzz with discussions about the upcoming Bitcoin halving in 2024, but there’s another significant event on the horizon this year. Mt. Gox, the hacked Bitcoin exchange, is set to repay its creditors by the end of October 2023, according to the trustee overseeing the process.
This repayment has the potential to significantly impact the cryptocurrency market in various ways.
Mt. Gox, founded in 2010, was once the largest Bitcoin exchange, handling around 70% of all BTC transactions before its collapse.
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In 2014, the exchange suffered a security breach, resulting in the loss of 850,000 BTC, equivalent to 4% of all Bitcoin to be issued.
This made Mt. Gox one of the largest cryptocurrency bankruptcies ever, and creditors have been waiting for repayment for nearly a decade.
Industry observers believe that the repayment of Mt. Gox will have a notable impact on the market. Jacob King, the founder and CEO of WhaleWire, anticipates that most creditors, who lost their Bitcoin nearly ten years ago, will sell at least a portion of their BTC upon receiving it.
This influx of sell orders could create downward pressure on prices and potentially lead to a market downturn.
The prolonged delays in the repayment process have already caused disillusionment among investors, eroding their confidence in the market.
While some creditors expect to continue holding their Bitcoin, there are concerns that the news of the coins being released will lead other non-claimant holders to sell due to fears of price decline.
Mt. Gox aims to repay over 10,000 crypto creditors worldwide, totaling 142,000 BTC ($4.3 billion) and 143,000 Bitcoin Cash (BCH) worth around $40 million, along with 69 billion Japanese yen ($510 million) in fiat currency.
Payments will be made individually, using a combination of fiat and cryptocurrencies.
The repayment of Mt. Gox funds is anticipated to be a significant event, but its impact on the market will depend on factors such as the manner of fund release and media coverage.
Whale Alert co-founder Frank Weert believes that while some may cash out, it is unlikely to cause a massive sell-off.
This event, on such a large scale, is unprecedented in the crypto industry.
Although skeptics downplay the potential effects, comparing the amount of Bitcoin to be repaid to the holdings of Bitcoin advocate Michael Saylor, the market can absorb this repayment within a relatively short timeframe.
On-chain and exchange volumes are substantial, making the event manageable.
Furthermore, the distribution of Mt. Gox’s Bitcoin to numerous individuals could have a positive impact on the network as a mass-distribution event, reactivating long-term holders and strengthening self-custody practices.
Overall, the long-awaited repayment of Mt. Gox’s creditors is expected to have a significant impact on the cryptocurrency market.
While some foresee a potential market downturn due to sell-offs, others believe it will be absorbed quickly.
Regardless, the event marks the end of an era plagued by Mt. Gox-related uncertainty and is seen as a positive step forward for the industry.
The Financial Conduct Authority (FCA), the financial regulator of the United Kingdom, has taken action against cryptocurrency ATMs, disrupting 26 out of the 34 machines it visited and inspected since the beginning of 2023.
On February 14th, the FCA issued an ultimatum to all crypto ATM operators in the country, stating that they must comply with regulations or cease their illegal operations.
In response to this warning, the FCA, along with other law enforcement agencies, conducted investigations into 36 crypto ATM locations using their authority under money laundering regulations.
Steve Smart, the joint executive director of enforcement and market oversight at the FCA, spoke out against the use of all crypto ATMs, highlighting the risks involved.
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He emphasized that using a crypto ATM in the UK means utilizing a machine that is operating illegally, and users may unknowingly be handing their money over to criminals.
Smart further clarified that victims of scams involving these ATMs, specifically those related to cryptocurrencies like Bitcoin (BTC), will not receive government protection or assistance from the ATM operators.
Between May and June, the FCA inspected 18 of these locations, coinciding with their public announcement about the initiation of their inspection campaign.
It is worth noting that all crypto exchanges and ATMs in the UK are required to register with the FCA and comply with the country’s money laundering regulations.
On July 8th, the Clive Police Department released a report detailing a crypto scam in which a fraudster posed as a law enforcement representative and managed to steal $6,000 from an unsuspecting victim while threatening them with an arrest warrant.
Scammers often employ fear tactics and impersonate law enforcement officials to deceive individuals into transferring funds through crypto ATMs.
However, it is important to remember that legitimate law enforcement agencies never demand payments over the phone or through cryptocurrency.
The FCA’s efforts to disrupt illegal crypto ATM operations and raise awareness about the risks associated with them are aimed at safeguarding the public and preventing financial crimes.
Individuals are urged to exercise caution and verify the legitimacy of any communication or transaction involving cryptocurrency to protect themselves from falling victim to scams.
Cboe Global Markets, a prominent exchange operator, has made significant changes to five spot Bitcoin Exchange-Traded Fund (ETF) applications by including a surveillance-sharing agreement (SSA) with Coinbase.
Invesco, VanEck, WisdomTree, Fidelity, and the joint fund by ARK Invest and 21Shares are among the ETFs that had their filings amended with the United States Securities and Exchange Commission (SEC) on July 11.
Cboe confirmed that it had recently reached an agreement with Coinbase regarding the terms of the SSA, which was finalized on June 21.
The initial filings for the ETFs had indicated that the parties were anticipating entering into an SSA prior to potentially offering the ETFs.
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The inclusion of SSAs in the filings is an attempt to meet the SEC’s requirements, which aim to prevent fraudulent conduct and safeguard investors.
The regulator outlined these standards on March 10, emphasizing the need for a comprehensive surveillance-sharing agreement with a regulated market that deals with significant amounts of the underlying or reference bitcoin assets.
Spot Bitcoin ETF applications have been a significant focal point for the industry in recent times.
Fidelity, Invesco, WisdomTree, and Valkyrie have all submitted filings, following the footsteps of BlackRock, a $10 trillion asset management firm, which also filed an ETF for SEC approval.
Additionally, on June 29, the U.S. stock exchange Nasdaq resubmitted its application to list BlackRock’s ETF, also incorporating an SSA with Coinbase.
The amended filings made by Cboe had a positive impact on the share price of Coinbase (COIN), with a nearly 10% increase observed on June 11.
This surge took Coinbase’s shares to their highest value since August 16, as reported by Google Finance.
However, despite its involvement in Bitcoin ETF applications, Coinbase is currently engaged in a legal dispute with the SEC.
The regulatory body has accused Coinbase of offering cryptocurrencies that it deems to be unregistered securities, leading to a lawsuit between the two parties.
In conclusion, Cboe Global Markets’ decision to amend the spot Bitcoin ETF applications to include a surveillance-sharing agreement with Coinbase reflects the industry’s efforts to comply with SEC standards.
This development has generated positive market sentiment, as demonstrated by the increase in Coinbase’s share price.
Nonetheless, Coinbase faces legal challenges from the SEC regarding the alleged offering of unregistered securities.
Bitcoin (BTC) made a fresh breakout attempt on July 11, as the battle for yearly highs intensified.
The cryptocurrency briefly surpassed $31,000 before the daily close on July 10, signaling a potential leverage crunch.
BTC/USD approached resistance but lost momentum and retraced over $800. However, some continuation was observed, and at the time of writing, Bitcoin was trading around $30,500.
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According to Michaël van de Poppe, the founder and CEO of trading firm Eight, the recent overnight move resembled a leverage crunch.
He cautioned traders about the choppy market and highlighted that while Bitcoin revisited previous highs, it did not make new lows, with $30,200 acting as a strong support level.
Crypto Daan, a popular trader, compared the recent price behavior with the Bart Simpson pattern, where Bitcoin’s price would spike and then retrace. However, the current market structure resembled the Burj Khalifa, indicating a different pattern.
Meanwhile, Rekt Capital, a trader and analyst, identified $30,600 as a crucial level for Bitcoin. He stated that BTC needed to turn this level into support in the coming days to confirm its breakout.
The market’s ability to hold above this level would be a significant indicator of Bitcoin’s upward momentum.
Glassnode, an analytics firm, noted that Bitcoin’s price cycles often exhibit repetitive patterns.
The $30,000 price level in the current cycle resembled a mid-point, similar to levels observed in previous cycles.
Glassnode referred to the current price action as “re-accumulation,” indicating a consolidation phase before potential further upward movement.
In conclusion, Bitcoin made a fresh breakout attempt, reaching above $31,000 before retracing. The market exhibited characteristics of a leverage crunch, with BTC finding support at $30,200.
Traders analyzed various price patterns and identified crucial levels, such as $30,600, to determine Bitcoin’s future direction. Glassnode suggested that the current price action resembled a phase of re-accumulation, similar to previous Bitcoin price cycles.
The digital asset industry experienced significant growth, reaching a peak of over $3 trillion in November 2021. However, the custodial sector of the market remained more modest, totaling $447.9 billion in 2022.
These figures are derived from a joint report on digital asset custody by consulting firm PricewaterhouseCoopers (PwC) and wealth tech platform Aspen Digital. The 39-page report was published on July 11.
The report identifies 120 custody service providers as of April 2023, categorized into two main groups: third-party service providers and self-custody solutions.
It highlights key institutional developments such as increased interest in crypto staking, driven by the Ethereum Merge, as well as the emergence of nonfungible tokens (NFTs) and the metaverse, attracting institutional investors.
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Security is cited as the primary challenge faced by the custody industry, as demonstrated by FTX’s failure in 2022, attributed to inadequate governance, risk management, and internal controls.
Consequently, institutions are increasingly seeking to safeguard their assets through reputable digital asset custodians or self-custody solutions rather than solely relying on exchange platforms for holding their assets.
Insurance policies present another challenge for custodians.
Self-custody solutions lack insurance coverage, leaving users uncompensated for any loss of digital assets resulting from negligence.
The report emphasizes that sound insurance policies are a critical factor when selecting digital asset custodians, as recognized by sources within family offices.
To assist investors, the report suggests a five-step approach to selecting a custody service provider.
These steps include mapping the market, creating a grading system, conducting performance reviews, and other necessary preliminary procedures.
In recent developments, Canada’s financial authority released guidance to aid fund managers in complying with legal requirements for investment funds holding crypto assets.
Additionally, it expressed confidence in the regulated futures market for cryptocurrencies, which it believes promotes greater price discovery.
The joint report by PwC and Aspen Digital sheds light on the state of digital asset custody, highlighting the challenges faced by the industry and offering recommendations for investors.
As the digital asset market continues to evolve, addressing security concerns and ensuring robust insurance policies will be crucial for the custodial sector to thrive.