FTX, a now-defunct crypto exchange, has reportedly sold off its stake in Grayscale Bitcoin Trust (GBTC). Recent reports indicate that FTX liquidated approximately 22 million shares, valued at nearly $1 billion, effectively reducing its GBTC ownership to zero.
This massive sale emerges after GBTC’s transformation into a spot exchange-traded fund (ETF), marking a pivotal moment in the defunct crypto exchange’s strategic maneuvers.
Grayscale’s conversion of its Bitcoin trust into a spot ETF, which now stands as the world’s largest Bitcoin ETF with assets exceeding $28.6 billion, was a landmark event in the crypto sphere.
This significant shift followed Grayscale’s victory against the US Securities and Exchange Commission (SEC), allowing the conversion last year. However, this transition has not been without its challenges, as GBTC witnessed outflows surpassing $2 billion since its conversion, hinting at a turbulent phase in the ETF market.
Implications For Bitcoin And The ETF Landscape
FTX’s divestment from GBTC coincides with a broader downturn in the Bitcoin market. Following the approval of numerous spot Bitcoin ETFs in the US, including prominent names like BlackRock’s iShares Bitcoin Trust and ARK 21Shares Bitcoin ETF, BTC’s value has experienced a significant decline.
Bitcoin has shed nearly 10% of its value in the past two weeks alone, erasing gains spurred by earlier anticipation of the spot ETF approvals. Currently, Bitcoin is struggling to maintain a price above $41,000.
With Bitcoin’s decline partly attributed to Grayscale’s recent sell-offs, Alistair Milne, a notable investor, suggests that now that FTX’s substantial sell-off is concluded, the downward pressure on BTC may ease, potentially paving the way for more stable or positive net inflows. This perspective offers a glimmer of hope for BTC’s future trajectory despite the recent woes of the sell-off.
FTX was apparently >1/3rd of GBTC’s outflows before today. That sell pressure has now gone
Makes net inflows far easier going forward… pic.twitter.com/YhlM022JIn
— Alistair Milne (@alistairmilne) January 22, 2024
FTX’s Legal Woes: The Bankman Family’s Battle
In a related development, the legal saga involving Sam Bankman Fried (SBF), the founder of the now-defunct FTX exchange, and his family continues to unfold.
SBF’s parents, Barbara Fried and Alan Joseph Bankman, recently filed a motion to dismiss the adversary complaint against them from FTX’s debtors. The complaint, launched last year, centers on allegations of breaches of fiduciary duties and fraudulent transfers.
The defense put forth by SBF’s parents challenges the notion of any fiduciary relationship between Mr. Bankman and the debtor entities, arguing against the validity of the breach of duty claims.
Additionally, the motion refutes allegations of aiding and abetting breach of fiduciary duty, emphasizing the lack of substantial evidence supporting these claims. The defense also disputes the fraudulent transfer accusations, citing insufficient proof of intent to defraud or the debtor’s insolvency during the relevant period.
Featured image from iStock, Chart from TradingView